1 january -30 june 2015 review report for … financial...accounting standards. our responsibilitv...

(CONVENİENCE TRANSLATİON OF THE INDEPENDENT AUDITORS’REVIEW REPORT ORIGİNALLY ISSUED İN TURİUSH)

SASA POLYESTER SANAYİ A.Ş.

FİNANCİAL STATEMENTS AND INDEPENDENT AUDITORS’REVIEW REPORT FOR THE İNTERİM PERİOD1 JANUARY -30 JUNE 2015

E! Güney Bağımsız Deneflm ve Tel: +902123153000SMMM AŞ Fax: +902122308291Eski Büyükdere Cad. ey.comOrjin Maslak No:27 Ticaret Sicil No: 479920-427502

Buıldınq a better Maslak, Sarıyer 34398workınq world Istanbul• Turkey

(Convenience translation of the independent auditors’ review report originaliy issued inTurkish)

Review Report on the Interim Financial Information

To the Board of Directors of Sasa Polyester Sanayi A.Ş.

Iııtrodııcİünz

We have reviewed the aecompanying Hnancial statements of Sasa Polyester Sanayi A.Ş. (“theCompany”) as of3O June 2015. which cornprise the slatement offlnancial position as of3O June 2015and the statement of profit or Ioss and other comprehensive income, statement of changes in eqnityand the statement of cash flows for the six-rnonth-period then ended and a summary of signiflcantaeconnting policies and explanaion’ notes. The management of the Cornpany is responsible for thepreparation and fair presentation of dıe interim financial information in accordance with the TurkishAccounting Standards. Our responsibilitv is to express a conelusion on these interim financialsrntements based on our review.

Seope of reı’k’w

\Ve conducted our review in accordance with the Standard on Review Engagements (SRE) 2410,‘Limited Review of Interim Financial Information Performed by the lndependent Auditor of theEntity”. A review of interim tinancial information consists of making inquiries. primarilv of personsresponsible for fınancial reponing process. and appling analytical and other review procedures. Areview of interim fınancial information k substantiallv less in seope than an independent auditperformed in accordance with the Turkish lndependent Auditing Standards and the objective of whichis to express an opinion on the flnancial statements. Consequently. a review on the interim financialinformation does not provide assurance that the audit 1km wilI be aware of alI signiflcant mallerswhich would have been identifled in an audit. Aceordingiy, ve do not express an aııdit opinion.

C’oııc!ıısioı,

Based on our review, nothing has come to our attention which may cause us to conclude that theaccompanving interim financial information of Sasa Polvester Sanayi A.Ş.. does not give ü true andfair view of fınancial position and fınancial performance of the Company as of 30 June 2015, and itscash flows for the six-rnonth period ıhen ended in accordaace with the Turkish Accounting Standards.

:im ve Serbest Muliasebeci Mali Müşavirlik Anonim ŞirketiLc Yotıng Global Limited

4 Aııgust 20istanbul, Türkiye

A member5,m of€rnst Syoung Giabal Lirnitad

CONTENTS PACE

STATEMENT OF FİNANCİAL POSITION 1

STATEMENTS OF COMEREHENSIVE INCOME 2

STATEMENTS OF CHANGES İN SHAREHOLD£RS’ EQUITY 3

STATEMENTS OF CASH FLOWS 4

NOTES TO THE FINANCİAL STATEMENTS 5-63

NOTE 1 ORGANISATION AND NATURE OF OPERATIONS 5NOTE 2 BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS 5-24NOTE 3 CASH AND CASH EQUIVALENTS 24NOTE 4 FINANCİAL ASSETS 24NOTE 5 BORROWINGS 25NOTE 6 TRADE RECEİVABLES AND PAYABLES 26-27NOTE 7 LIABILITIES FOR EMPLOYEE BENEFITS 28NOTE 8 OTHER RECEİVABLES AND PAYABLES 28-29NOTE 9 INVENTORIES 29-30NOTE 10 PREPAID EXPENSES 30NOTE Il INVESTMENT PROPERTY 31NOTE 12 TANGIBLEASSETS 32-33NOTE 13 INTANGIBLE ASSETS 34NOTE 14 ASSET HELD FOR SALE 35-36NOTE 15 PROVISİONS, CONTİNGENT ASSETS AND LİABİLITIES 36-37NOTE 16 COMMITMENTS 37-38NOTE 17 EMPLOYEE BENEFİTS 39-40NOTE 18 OTHERASSETSANDLIABILITİES 41NOTE 19 DERİ VATİVE INSTRUMENTS 41NOTE 20 SHAREHOLDERS’ EQUITY 42-44NOTE 21 SALES AND COST OF SALES 4415NOTE 22 OPERATİNG EXPENSES 1617

NOTE 23 INCOME FROM INVESTING OPERATIONS 17

NOTE 24 OTHER OPERATİNG INCOME / EXPENSE 4718NOTE 25 FINANCİAL INCOME 48NOTE 26 FINANCİAL EXPENSES 48NOTE 27 TAX ASSETS AND LIABILİTIES 49-52NOTE 28 EARNINGS PER SHARE 52NOTE 29 RELATED PARTY DISCLOSURES 52-57NOTE 30 FINANCİAL RİSK MANAGEMENT 57-66NOTE3İ SUBSEQUENTEVENTS 66

(CONVENIENCE TRANSLATİON INTO FNGLISH OF INTERIM FİNANCİAL STATEMENTSORICINALLY ISSUED İN TURKISH)


STATEMENT OF FINANCİAL POSITİON AT 30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

Current Period Prior Period

(Reviewed) (Audited)Notes 30 June 2015 31 December 2014

ASSETSCurrent Assets 531.115 450.566

Cash and Cash Equivalents 3 57.239 13.986Trade Receivables 6 252.214 231.357- Trade Receivablesfrom Third Partles 252.158 231.357. Trade Receiı’ab/esjrorn Re/ated Parıies 56 -

Other Receivables 8 1.259 3.504- Other Reeeivablesfrom Third Partles 1.259 3.177- Ot/ter Receivablesfrom RelawdParties - 327Inventories 9 200.177 183.087Prepaid Expenses 10 4.878 241Other Currenı Assets 18 9.453 12.334Asscts HeId for Sale 14 5.895 6.057Non-Current Assets 212.782 214.978Trade Receivables 6 - 4.294Other Receivables 8 60 60Investment Properttes Il 945 1.039Tangible Assets 12 145.022 140,848lnrnngible Assets 13 2.392 2.423Prepaid Expenses 10 39 854DeferredTaxAssets 27 10.268 5.694Otner Non-Current Assets 1 8 54.056 59.766

TOTAL ASSETS 743.897 665.544LIABILITIESCurrent Liabilities 359.388 320.906Short-Term Bonowings 5 188.061 199.842Trade Payables 6 160.340 112.903- Trade Pavables tü ThirdParties 160.338 /03.529- Trade Pavables tü Related Partles 2 9.374Employee Benefıt Obligations 7 4.479 3.259Other Payables 8 2.239 1.697. Other Prn’ahles tü Third Parties 2.239 1.687. Other Prn ‘ah/es tü Related Parties - 10Provision for Corporate Tax 27 372Current Provisions 3.897 3.205-Shorr-Term Provisions /5 8/9 705-Short-Term Provisions for Emplosnıent Beneflıs /7 3.078 2.500

Non-Current Liabities 23.761 24.302rinancial Liabdities 5 2.000 4.000Long-Term Provisions 21.761 20.302-Long-Term Provisions for Ernp/ovment BenejUs /7 21. 76/ 20.302

£QUITY 360.748 320.336Share Capital 20 216.300 216.300Share Capital Intlation Adjustments 20 196.213 196.213Restricted Reserves 20 5.963 5.356Actuarial Loss Fund for Employee Termination Benefits 20 (2.073) (2.073)Accumulated Losses 20 (96.067) (166.840)Net Profıt for the Pedod 40.312 71.380

TOTAL LİABILITIES 743.897 665.533

[hc accompanying noes form an integral part of thcsc interim linancial statcmcnts.

(CONVENIENCE TRANSLATION INTO ENGLISH OF INTERIM FINANCİAL STATEMENTSORIGINALLY ISSUED İN TURKISH)


İNTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousnnds oFTurkish Lira(TL”) unless otherwise indicated

Current Period Curreot Period Prior Period Prior Period

(Reviewcd) (Reviewed)

1 January- 1 ApriI - t Jnnunry - 1 April -Notes 30June20l5 3OJune2OIS 3OJune2OI4 30June20l4

CONTINUING OPERATIONS

Revenuc (Net) 21 559.495 297.076 624.126 301.058

Cost of Sales (-) 21 (483,324) (248.73!) (552.693) (268.126)

GROSS PROFIT 76.171 48335 71.433 32.932

General Administrative Ewenses (-) 22 (9.092) (4.667) (8,756) (3.086)

Marketing. Saks and Distribution Expenses(-) 22 (25.195) (12.119) (25.6M) (12.557)

Research and Development Fxpenses (-) 22 ç9I2) (450) (928) (475)

Otlwr Operating Ineome 24 55.580 24.929 46.331 24.458

Other Opemtine Expenses (-) 24 (35.394) (25.738) (45.062) (24.127)

OPERATING PROFIT 61.158 30.000 37354 16.135

Investment Income 23 - - - -

Investment Expenses (-) 23 - . - -

OPERATINC (LOSS) / PROFIT BEFOREFİNANCİAL (LOSS) / rROFıT 61.158 30.000 37.354 16.145

Financial Income 25 2,662 1,416 2.772 1.271

Financial Expcnses(-) 26 (27.610) (8.194) (9.831) (3.488)

OPERATING (LOSS) / PROFIT

BEFORETAX 36.210 23.222 30.295 13.931

Tax Benefit / (Epense) 3.202 3.635 1.586 241

- Curent Tm< [xpense 27 (372) (372) - -- Deferred ‘rax Income 27 4.574 4.007 1.586 241

PROFIT FOR THE PERİOD

30.412 26.857 31.881 14.172

Other Comprelıensive Income / (Expense)

Aetuarial Loss Arising from Employee Denctits - - - -

TOTAL COMPREHENSIVE INCOME /(EXPENSE) 40.412 26.857 31.881 14.172

Earnings per share (1 lundred) 28 0,19 0.12 0,15 0.07

‘[hc aecompanying notes Iörm an integral part ot’these interim flnancial statemenıs,

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(CONVENIENCE TRANSLATION INTO ENGLISH OF INTERIM FINANCIAL STATEMENTSORIGINALLY ISSUED İN TURKISII)


CASH FLOWS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

Current Period Prior Period(Reviewed) (Reviewed)

t Januars’ - 1 January -

Notes 3OJune2OIS 3OJune2Ol4

Profit before taxation 36.210 30.295

Cash Fİows from operating activities

Depreciation and amonization expense 11,12.13 6.992 10.718

Interest expense 26 5.133 7.450

Provision for impainııent on fıxed assets 24 6.195 -

Change in provision for employee beneflts 17 3.287 3.187

Changes in provisions 15 114 234

Interest income from bank deposits 25 (284) (142)

Rediscount interest income (net) 6 (173) (1.218)

Provision for doubtful receivable 6 151 374

Employee premium provision 17 1.247 -

Provision for impairment on inventories-net 9 3.752 2.600

Operating cash flows providedbefore clıanges in working capital: 62.624 53.498

Changes in operating asscts and İiabilities:Changes in trade receivable 6 (16.802) (2.557)

Changes in due from related panies 6,8 271 (282)

Changes in inventories 9 (20.842) (2.525)

Changes in other receivables 8 1 .9 18 560

Changes is prepaid expenses 10 (3.822) (3.828)

Changes in other cunent assets 18 2.881 (12.345)

Changes in other non-cunent assets 18 5.710 9.144

Changes in trade payabİes 6 56.936 (76.575)

Changes in due to related panies 6,8 (9.384) (1.984)

Changes in debt for employee terminarion benefıts 7 2.096 8 13

Changes in other shon term Iiabilities 8 552 6.332

82.138 (29.739)

Empİoyment termination benetits paid 15,17 (1.684) (1.229)

Employee premium provision paid 17 (1.247) (1.000)

Tax payable paid 8 - (1.218)

Net cash generated by / (used in) operating activities 79.207 (33.196)

lnvesting activities:Purchase of property, plant and equipment and intangible assets 12.13 (17.324) (1 . 106)

Net cash used in investing activities (17.324) (1.106)

Financing activities:

Bank Ioans used 5 150.576 156.419

Interest paid 5.26 (9.559) (4.498)

Interest received 25 284 142

Repayment of borrowins 5 (159.931) (111.829)

Net cash (used in) / generated bi’ fınancing activities (18.630) 30.233

Net increase / (decrease) in cash and cash equivaİents 43.253 5.932

Cash and cash equivalents al the beginning of the period 3 13.986 600

Cash and cash eguivalents at the end of the period 3 57.239 6.532

The accompan\ing noks lörrn an integral pan ol (hese interim tinancial Makments.

4

(CONVENIENCE TRANSLATİON INTO ENGLISH OF INTERIM FINANCİAL STATEMENTSORIGINALLY ISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 <ilİNE 2015(Amounts expressed in thousands of Turkish LfraC’TL”) unless otherwise indicated

NOTE 1- ORGANISATİON AND NATURE OF OPERATİONS

Sasa Polyester Sanayi A.Ş. (the “Company”) was incorporated On 8 November 1966 in Adana. TheCompany k mainly engaged in the production and marketing of polyester fıbre, yans and relatedproducts and polyester chips. The Company is a subsidiaıy of Erdemoğlu Holding A.Ş. (“ErdemoğluHolding”). (*) Shares of the Company are quoted on the Borsa istanbul A.Ş..

The address of the registered offlce is Yolgeçen Mahallesi Turhan Cemal Beriker Bulvarı No:55901355 Seyhan/Adana.

As of 30 June 2015, number of employees of the Company is 1.083 (31 December 2014: 1.088).

(*) Ali shares of Hacı Ömer Sabancı Holding A.Ş.in SASA Polyester Sanayi A.Ş with a nominal valueof 110.313.001,18 TL corresponding to 51 % of the share capital of the Company was soid to theErdemoğlu Holding. The transfers of shares took place on 30 April 2015.

NOTE 2- BASIS OF PRESENTATİON OF FİNANCİAL STATEMENTS

2.1 Basis of preparation

Accounting Standards

The interim financial statements and disclosures have been prepared in accordance with thecommuniqu numbered 11-14.1 “Communiqud on the Principles of Financial Reporting in CapitalMarkets” (the Communiqu) announced by the Capital Markets Board (“CMB”) (hereinafter will berefered to as “the CMB Accounting Standards”) on 13 June 2013 which is published on OffıcialGazette numbered 28676. in accordance with article Sth of the CMB Accounting Standards.companies shotıld apply Turkish Accounting Standards/Turkish Financial Repoding Standards andinterpretations regarding these standards as adopted by the Public Oversight Accounting and AuditingStandards Authority (“POA’<).

According to decision which was made by CMB on 17 March 2005. from the date of 1 Januarv 2005there k no need for intlation accounting application for the listed companies performing in Turkey.The Company has prepared the financial statements according to this decision.

Functionai and representative currency of the Company is TL.

The financial statements are based on the siatuiory records, with adjustments and reclassiFıcations forthe purpose of fair presentation in accordance with the Accounting Standards of the POA. Theaccompanying ünancial statements are prepared in accordance with the TAS/TFRS we haveperformed several adjustments suclı as Termination indemnity adjustment in accordance with RS 19.Recognition of income and expense accruals and deferred tax adjustments, which are not included inthe statutoıy books. The financial statements are prepared according to the historical cost basis.

D

(CONVENIENCE TRANSLATION INTO ENGLISH OF INTERIM FİNANCİAL STATEMENTSORIGİNALLY ISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (continued)

Financial statements are approved for deciaration by Board of Directors on 4 August 2015 and signedby General Manager Toker Özcan and Director of Finance Mehmet Pehlivan on behaif of theBoard of Directors. The tinancial statements of the Company are subject to the approval ofshareholders in the General Assembiy and the shareholders possess the right to ask for amendment ofthese financial statements at the General Assembly after issuance.

2.2 Comparatives and restatement of prior periods’ fınancial statements

For the purpose of following the financial conditions and performance trends the fınancial statementsare presented with comparison to the prior year. When needed, the prior year financial statements canbe reciassifled for consistency with the current year’s one and material differences can be revealed.

Pursuant to the decree taken in the CMB’s meeting dated 7 June 2013 and numbered 20/670, forcapital market board institutions within the scope of the Comrnuniqu on Principles RegardingFinancial Reporting in the Capital Market, fınancial statement tempiates and a user guide have beenpublished, effective as of the interim periods ended after 31 March 2013.

The ciassifications made in the statement of financial position of the Company as of 30 June 2014 areas follows:

-Bonus provision for employees amounting to TL 850 presented in other operating expenses prior periodwas ciassifled as general and administrative expenses.

2.3 Offsetting

Financial assets and Iiabilities are offset and the net amount reported in the balance sheet when thereis a legaliy enforceable right to set off the recognized amoıınts and there is an intention to senle onanet basis, or realize the asset and senle the liability simultaneously.

2.4 Changes in Accounting Policies

Changes in accounting policies are apphied retrospectively and the financial tables for prior years arerestated.

2.5 Changes in Accounting Estimates and Errors

The effect of a change in an accounting estimate is recognized prospectively in the year of the change,if the change affects that year oniy; or the year of the change and future years, if the change affectsboth. There has not been any signiflcant change in the accounting estimates of the Company in thecurrent year.

Clıanges in accounting policies are applied retrospectively and the flnancial statements for prior yearsare restated.

6

(CONVENIENCE TRANSLATİON INTO ENGLISH OF INTERIM FİNANCIAL STATEMENTSORİGİNALLY ISSULO İN TURKISH)




2.6 New and Revised İnternationaİ Finaneiaİ Repoding Standards

The accoıınting policies adopted in preparation of the interim financial statements as at 30 June 2015are consistent with those of the previous financial year. except for the adoption of new and arnendedTFRS and TFRIC interpretations effective as of 1 Januaıy 2015. The effects of these standards andinterpretations on the Company’s financial position and performance have been diselosed in therelated paragraphs.

i) The new standards, amendmcnts and interpretations which are effective as at 1 January 2015are as follows:

TAS 19 Defined Benefit Plans: Employee Contributions (Amendment)

TAS 19 requires an entity to consider contributions from employees or third partles when accountingfor defined benefit plans. The amendments eIarif’ that, if the amount of the contributions isindependent of the number ofyears of service, an entity is permitted to recognise such contributions asa reduction in the service cost in the period in which the service 15 rendered, instead ofallocating thecontributions to the periods of service. These amendments are to be retrospectively applied for annualperiods beginning on or after 1 JuIy 2014. The amendment did not have an impact on the financialstatements of the Company.

Annual Improvements to TASTFFRSs

in September 2014, POA issued the below arnendments to the standards in relation to “AnnualIınprovements - 2010—2012 Cycle” and “Annual lrnprovements -2011—2013 Cycle. The changes areeffective for annual reponing periods beginning on or after 3 July 2011.

Annual Improvements - 2010—2012 Cycle

TFRS 2 Share-based Payment:

Defınitions relating to performance and service conditions which are vesting conditions are ciarifled.The amendment 15 effective prospectively.

TFRS 3 Business Combinations

The amendment clarifıes that alI contingent consideration arrangements classifled as Iiabilities (orassets) arising from ü business combination should be subsequently measured at fair value throughprofit or Ioss whether or not they fail within the seope of IAS 39 (or IFRS 9, as appiicable). Thearnendment k effectlve for business cornbinations prospectively.

7





TFRS 8 Operating Segments

The changes are as follows: 1) An entity must diselose the judgments made by management inapplying the aggregation eriterla in IFRS 8. ineluding a brief description of operating segments thathave been aggregated and the economic characteristics (e.g., sales and gross margins) used tü assesswhether the segments are ‘similar’. ii) The reconciliation of segment assets to total assets k oniyrequired to be disclosed ifthe reconciliation 15 reported to the chief operating decision maker. Theamendments are effective retrospectively.

TAS 16 Propertv, Plant and Equipment and TAS 38 Intangible Assets

The amendment tü TAS 16.35(a) and TAS 38.80(a) ciarifles that revaluation can be performed. asfollows:1) Adjust the gross canying amount of the asset ta market value or ii) determine the market value ofdıe canwing amount and adjust the gross canying amount proportionately 50 that the resulting canyingamount equals the market value. The amendment is effective retrospectivel.

TAS 24 Related Party Disclosures

The amendment ciarifles that a management entity — an entitv that provides key managementpersonnel sen’ices — Isa related party subject tü the related party disclosures. The amendment iseffective retrospectively.

Annual Improvements —2011—2013 Cycle

TFRS 3 Business Combinations

The amendment clarifıes that: 1) Joint anangements are outside the scope ofTFRS 3, not just jointventures Il) The seope exception apphies oniy tü the accounting in the fınancial statements of the jointarrangement irself. The amendment is effective prospectiveI.

TFRS 13 FairValue Measuremenr

The portfolio exception in TFRS 13 can be applied tü fınancial assets. fınancial liabilitles and othercontracts within the scope of IAS 39 (or IFRS 9. as applicable). The amendment k effectiveprospectively.

TAS 40 Investment Property

The amendment clarities the interrelationship oFTFRS 3 and TAS 40 when cIassif’ing property asinvestment property or owner-occupied property. The amendment 15 efTective prospectively.

The amendments did not have a signifkant mpact on the interim financial staternents of the Company.

8

(CONVENIENCE TRANSLATİON İNTO ENGLİSH OF İNTERİM FİNANCİAL STATEMENTSORİGİNALLY İSSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PEİUODBETWEEN 1 JANUARY -30 ilİNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated


ii)Standards issued but not yet effective and not early adopted

Standards, interpretations and amendments to existing standards that are issued but not yet effective upto the dale of issuance of the interim financial statements are as follows. The Company wili make thenecessary changes if not indicated otherwise, which wiil be affecting the financial statements anddisclosures, when the new standards and interpretations become effective.

TFRS 9 Financial [nstruments — Ciassifıcation and measurement

As amended in December 20 İ 2 and Februaıy 2015, the new standard is effective for annual periodsbeginning on or after İ January 2018, with early adoption permitted. Phase 1 ofthis new TFRSintroduces new requirements for classil’ying and measuring financial instruments. The amendmentsmade to TFRS 9 wilI mainiy affect the ciassitication and measurement of financial assets andmeasurement of fair value option (FVO) İiabilities and requires that the change in fair value of a FVOfınancial Iiability attributable to credit risk is presented under other comprehensive income. TheCornpany / the Group wiil quanti1’ the effect in conjunction with the other phases, when the finalstandard including ali phases is adopted by POA.

TFRS Il Acquisition of an Interest in a Joint Operation (Amendment)

TFRS 11 is amended to provide guidance on the accounting for acquisitions of interests injointoperations in which the activity constitutes a business. This amendment requires the acquirer ofaninterest in ajoint operation in which the activity constitutes a business, as deflned in TFRS 3 BusinessCombinations, to apply ali of the principles on business combinations accounting in TFRS 3 and otherTFRSs except for those principles that conflict with the guidance in this TFRS. İn addition, theacquirer shail disclose the information required by TFRS 3 and other TFRSs for businesscombinations. These amendrnents are to be applied prospectively for annuaİ periods beginning on orafter İ Januaıy 2016. Eariier appiication is permilled. The amendments wili not have an impact on thefinancial position or performance ofthe Company / the Group.

TAS 16 and TAS 38- Ciarification of Acceptable Methods of Depreciation and Amortisation(Amendments to TAS 16 and TAS 38)

The amendments to TAS İ6 and TAS 38, have prohibited the use of revenue-based depreciation forproperty, plant and equipment and signifıcantly limiting the use of revenne-based amortisation forintangible assets. The amendments are effective prospectively for annual periods beginning on or after

1 Januaıy 20İ6. Earlier appiication is permitted. The amendments wiil not have an irnpact on thefinancial position or perfomiance of the Company.

9

(CONVENIENCE TRANSLATİON İNTO ENGLISH OF INTERIM FINANCİAL STATEMENTSORIGİNALLY İSSUED İN TURKİSH)


EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL”) unless otherwise indicated


TAS 16 Property, Plant and Equipment and TAS 41 Agriculture (Amendment) — Bearer Plants

TAS İ6 is amended to provide guidance thar bearer pİants. sııch as grape vines, rubber trees and oilpalms shouid be accounted for in the same vay as property. plant and equipment in TAS İ6. Once abearer plant is mature. apart from bearing produce. its biological transformation is no longersigniflcant in generating future economic beneFıts. The oniy signiflcant future economic beneflts itgenerates come from the agricultural produce that it creates. Because their operation is similar to thatof manufacruring. either the cost model or revaluation model should be applied. The produce growingon bearer plants wilI remain within the scope of TAS 41, measured at fair value less costs to seli.Entities are required to apply the amendments for annual periods beginning on or after 1 Januaıy 2016.Earlier application is permitted. The amendment is not applicable for the Company and wiil not havean impact on the fınancial position or pertörmance of the Company.

TAS 27 Equity Method in Separate Financiaİ Statements (Amendments to TAS 27)

İn February 2015, Public Oversight Accounting and Auditing Standards Authority (POA) of Turkeyissued an amendment to TAS 27 to restore the option to use the equity method to account forinvestments in subsidiaries and associates in an entity’s separate financial statements. Therefore, anentitv must account for these investments either:• At cost• İn accordance with IFRS 9.Or• Using the equity method detined in TAS 28

The entity must apply the same accounting for each categoıy of investments. The amendment iseffective for annual periods beginning on or afler 1 Ianuaıy 2016. The amendments must be appliedretrospectively. Early application is permitted and must be disclosed. The amendment is not applicablefor the Company and wilI not have an impact on the flnancial position or performance of theCornpany.

TFRS 10 and TAS 28: Sale or Contribution of Assets between an Investor and its Associate orJoint Venture (Amendments)

İn February 2015, amendments issued to TFRS 10 and TAS 28, to address the acknowledgedinconsisteney between the requirements in TFRS 10 and TAS 28 in dealing with the loss of control ofa subsidiaıy that is contributed to an associate or ajoint venture, to clariIi that an investor recognises aFiilİ gam or Ioss on the sale or contribution of assets that constitute a business, as defined in TFRS 3.between an investor and its associate or joint venture. The gam or loss resulting from the remeasurement at fair valtıe of an investment retained in a former subsidiary should be recognised onhyto the extent of unrelated investors’ interests in that former subsidian’. An entity sha)I appiy thosearnendments prospectively to transactions occurring in annual periods beginning on or after 1 Januar20 16. Earlier apphication is permitted. The amendment is not apphicabhe for the Company and wihİ nothave an irnpact on the fınancial position or performance of the Company.

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TFRS 10, TFRS 12 and TAS 28: Investment Entities: Applying the Consolidation Exception(Amendments to IFRS 10 and IAS 28)

in Februaıy 2015, amendrnents issued to TFRS 10, TFRS 12 and TAS 28, to address the issues thathave arisen in applying the investment entitles exception under TFRS 10 Consolidated FinancialStatements. The amendments are applicable for annual periods beginning on or after 1 Januaıy 2016.Earlier application is permitted. The amendment is not applicable for the Company and wili not havean impaet on the financial position or performance of the Company.

TAS 1: Disclosure Initiative (Amendments to TAS 1)

in February 2015, amendments issued to TAS 1. Those amendments include narrow-focusimprovements in the following five areas: Materiality, Disaggregation and subtotals, Notes structure,Disclosure of accounting policies, Presentation of items of other comprehensive income (OCI) arisingfrom equity accounted investments. The amendrnents are applicable for annuai periods beginning onor after 1 Januaıy 2016. Earlier appİication is permitted. These amendments are not expected havesignificant impact on the notes to the financiaİ staternents of the Company.

Annual Improvements to TFRSs - 2012-2014 Cycle

in February 2015, POA issued, Annual improvements to TFRSs 2012-2014 Cycle. The document setsout five amendrnents to foıır standards, excluding those standards that are consequentially amended,and the related Basis for Conclusions. The standards affected and the subjects of the arnendments are:

-IFRS 5 Non-current Assets Heid for Sale and Discontinued Operations — ciarifles tiıat changes inmethods of disposal (through sale or distribution to owners) would not be considered a new plan ofdisposal, rather it Isa continuation of the original plan

-IFRS 7 Financial lnstruments: Disclosures — ciarifles tlıat the assessment of seıwicing contracts thatincludes a fee For the continuing involvement of financial assets in accordance with IFRS 7

-IAS 19 Employee Benefıts — clarifıes that market depth of high quality corporate bonds is assessedbased on the currency in which the obligation is denominated, rather than the country where theobligation is located

-İAS 34 İnterim Financial Reporting —clarifıes that the required interim disclosures must either be inthe interim Fınancial statements or incorporated by cross-reference between the interim flnanciaİstatements and wherever they are included within the interim financial report

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless othenvise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCIAL STATEMENTS (continued)

The amendments are effective for annual periods beginning on or afler 1 January 2016, with earlierapplication permiued. The Company is in the process of assessing the impact of the amendments onfinancial position or performance of the Company.

The new standards, amendments and interpretations tbat are issued by the İnternationalAccounting Standards Board (IASB) but not issued by Public Oversight Authority (POA)

The following standards, interpretations and amendments to existing IFRS standards are issued by theİASB but not yet effective up to the date of issuance of the financial statements. However, thesestandards, interpretations and amendments to existing İFRS standards are not yet adapted/issued by IhePOA, thus they do not constitute part of TFRS. The Company wiil make the necessaıy changes to itsfinancial statements after the new standards and interpretations are issued and become effective underTFRS.

Annual Improvements — 2010—2012 Cycle

IFRS 13 Fair Value Measurement

As elarifled in the Basis for Conelusions short-term receivables and payables with 110 stated interestrates can be heM at invoice amounts when the effect of discounting is immaterial. The amendment iseffective immediateiy.

Annual lmprovements —2011—2013 Cycle

IFRS 15 Revenue from Contracts with Customers

İn May 2014, the İASB issued İFRS 15 Revenue from Contracts with Customers. The new five-stepmodel in the standard provides the recognition and measurement requirements of revenue. Thestandard applies to revenue from contracts with customers and provides a model for the sale of somenon-tinancial assets that are not an output of the entity’s ordinaıy activities (e.g., the sale of property,plant and equipment or intangibles). İFRS 15 original effective date was 1 January 2017. However, iniuly 2015, IASB decided to defer the effective date to be effective for reporting periods beginning onor after 1 Januaıy 2017, with early adoption permitted. Entities wili transition to the new standardfollowing either a fulI retrospective approach or a modifled retrospective approach. The moditledretrospective approach would ahlow the standard to be applied beginning wiih the current period, withno restatement of the comparative periods, but additional disclosuıres are required. The Company is inthe process ofassessing the impact of the standard on financial position or performance of theCompany.

IFRS 9 Financial İnstruments - Final standard (2014)

İn July 2014 the IASB pubhished the final version of IFRS 9 Financial İnstruments. The final versionof IFRS 9 brings together the classification and measurement, impairment and hedge accouıntingphases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

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SASA POLYESTER SANAYi A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL”) unless otherwise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (conhinued)

IFRS 9 15 built on a logical, single classiflcation and measurement approach for fınancial assets thatreflects the business model in wlıich ihey are managed and their cash flow characteristics. Built uponthis Isa fonvard-looking expected eredit loss model that vilI result in more timely recognition of banlosses and Isa single model that 15 applicable to alI Fınancial instrııments subject to impairmentaccounting. in addition, IFRS 9 addresses the so.called own credit’ issue. whereby banks and othersbook gains through profit or Ioss asa result of the value of their own debt falling due to a decrease incredit worthiness when they have elected to measure that debı at fair value. The Standard also includesan improved hedge accounting model to better link the economics of risk management wiih itsaccounting treatment. İFRS 9 15 effective for annual periods beginning on or after 1 Januaıy 2018.However, the Standard is available for early application. in addition, the own credit changes can beearly applied in isolation without othenvise changing the accounting for financial instruments. TheCompany is in the process of assessing the impact of the standard on financial position or performanceof the Company.

2.7 Signillcant Accounting Estimations and Decisions (continued)

Preparation of financial statements necessitates the usage of estimates and assumptions that can affectthe amounts of reported assets and liabilities as at statement of financial position date. the explanationfor the contingent assets and liabilities and the income and expenses reported during the accountingperiod. Although these estimates and assumptions are based on Company management’s bestestimates related with the current conditions and tmnsactions, actua[ results may difter than theseestimates.

Net Realizable Value of lnventorv

lnventories are stated at the lower of cost and net realizable value. The Company Management hasdetermined that the cost of inventories is higher İhan the realizable value as of the reporting date. Theimpairment calculation requires management 10 estimate the future cash flows expected to arise fromthe sale of inventories and the estimated selling price hess alI estimated costs of completion and costsnecessary to make the sale. Based on the estimation made by the Management as of 30 June 2015 thecost of inventories was reduced by TL 3.752 (3! December 2014: TL 8.262) aııd it was recorded tocost of sales (Note 9).

Determination of Recoverable Amount of Tanaible Assets

As discussed in Note 12, the Company took into consideration the internal and external sources ofinformation as described in TAS 36 “lmpairment ofAsseis” as impairment indicators and performed astudy based on discounted future cash llow models for the determination of the recoverable amount ofthe Company’s tangible assets as at 30 June 2015. The future projections included in the subject studyis heavily dependent on the demand of customers in the markel. Moreover, the Company managementforesees that weiuht of production and sale of the products with higher gross protit rnargin wilIncrease in future periods. This study which is based on discounted future cash flows reflects the

Company management’s future estimations and assumptions.(Note 12)

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 .mNE 2015(Amounts expressed in thousands of Turkislı LiraC’TL”) unless otherwise indicated


Defened tax

The Company recognizes deferred tax assets and liabilities based upon temporaıy differences arisingbetween the financial statements as reported for TFRS purposes and financial statements prepared inaccordance with the tax legislation. Currentiy. there are deferred tax assets resulting from operatingIoss carıy-forwards and deductibie ıemporary ditTerences, ali of which couid increase taxabie incomein the future. Based on avaiiable evidence, both positive and negative, it is determined whe[her it isprobable that ali or a portion of the deferred tax assets vili be reaiized. The main factors which areconsidered inciude future eamings potential; curnulative losses in recent years; histoıy of loss cari>’forwards and other tax assets expiring: the carıy-fonvard period associated with the deferred taxassets; future reversais of existing taxabie ternporary differences; tax-planning strategies İhat wouid, ifnecessarv. be impiemented, and the nature of the income that can be used to reaiize the deferred taxasset. if based on the weight of ali available evidence, it is the Company’s belief that taxabie profitwili not be avaiiable suftieient to utilize some portion of these defered ta assets, then some portionof or ali of the deferred tax assets are not recognized. The Company has not recognized some of iNdeferred tax assets because it is not probable that taxable profıt wiil be available sufflcient to recognizedeferred tax assets in this entity. if future results of operations exceed the Cornpany’s curentexpectations. the existing unrecognized deferred tax assets may be recognized. resuiting in future taxbenefıts.(Note 19)

VAT

The company has reciassifled VAT amount which is estirnated to not use in short term period undercurrent assets.(Note 27)

Retirement Pay Liabiiitv

Retirement benefit obiigations’ present vaiue is determined through using certain assumptions underactuariai basis. These assumptions are aiso used in derermining sevemııce compensation’s net expenseand include the discount mtio. Any change in such assumptions aftects the value of the registeredretirement benetit obligation. The retirement benefit obiigation recognized in the baiance sheetrepresents the present vaiue of the defined benefit obiigation as adjusted for unrecognized actuarialgains and iosses. Ali actuariai gains and losses are recognized under the fund ofactuariai ioss/eamingsfund for empioyee termination beneflts under equity.

At the end of each year, the Company determines the appropriate discount ratio. This mtio is used tocalcuiate for the fiulfllment of obhgations for severance compensation’s present value of estimatedfuture cash outflows (Note 7).

2.8 Summary of Significant Accounting Policics

The signifıcant accounting poiicies used in the preparation of the Fınancial statements are sıırnmarizedbe Iow:

Revenuc

Revenue is recognized on accruai basis at the fair value of the amount obtained or to be obtained basedon the assumptions tiıat deliveıy is realized, the income can be reliabiy determined and the inflow ofthe economic beneüts related with dıe transaction to the Company is probable. Net sales are calculatedafter the saies returns and sales discounts are deducted.

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Sak ofgoods:

Revenue from sale of goods is recognized when aİl the following conditions are met:

• Transformation the significant risks and benefits ofownership to the buyer by the Company.

• The absence of Company’s conhinuing manageriah invohvernent associated wiih ownership andeffective control over the goods sold.

• The amount of revenue can be measured reliabiy,

• it is probable that the economic benefits associated with the transaction wilİ flow to the entiiy and,

• The costs incurred or to be incurred in respect of the transaction can be measured reliabiy.

Other Revenues are recognized in accordance with foİlowing;

Segment reportiııg:

Operating segments are reponed in a manner consistent with the intemah reporting provided to thechief operating decision makers of the Company. The chief operating decision makers. who areresponsible for allocation resources and assessing performance of the operating segments. have beenidentifled as the senior management that makes strategic decisions.

The senior managernent of the Compan makes strategic decisions as a whole over dıe operations ofthe Company as the Company operates in a single industıy and operations outside Turkey do notpresent an important portion in overahl operations. Based on those reasons. there is a single reportablesegment in accordance with the provisions in TFRS 8 and segment reporting is not applicable.

Rental incoıne:

Rentah income from investment properties is recognized on a straight-hine basis over the term of thereievant lease.

Inventories

İnventories are stated at the Iower of cost and net realizable value. Costs, inciuding an appropriateportion of flxed and variable overhead expenses, are assigned to inventories heid by the method mostnppropriate to the particular class of inventoıy, with the majority being valued on weighted averagebasis. Net reahizable value represents the estimated selling price Iess alİ estimated costs of completionand costs necessary to make a sale. When the net realizable value of inventoıy k Iess Ihan cost, thenventory is wriflen down to the net realizable value and the expense is inehıded in statement of

income/(ioss) in the period the write-down or hoss occurred. When the circıımstances that previoushycaused inventories to be wriuen down behow cost no longer exist or when thıere is chear evidence of anincrease in net reahizable value because of changed economic circumstances, the amotınt of the writedown is reversed. The reversal amount is limited to the amoıınt of the original write-down.

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraÇ’TL”) unless othenvise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (con6nued)

Related Parties

Panies are considered reİated tü the Company if

(a) A person or a ciose member of that persons famlly k related tü a reporting entity ifthat person:

(1) has control orjoint control over the reporting entiiy,(ii) has signiFıcant influence over the reporting entity, or(ili) k ü member of the key management personnel of the reporting entiiy or of a parent of the

reporting entity.

(b) An entity k related tü a reporling entitv ifany of the foiiowing conditions applies:

(1) The entity and the reporting entity are members of the same group (which means thateach pareni, subsidiary and fellow subsidiaıy k related to the others),

(ii) One entiiy is an associate or joint venture of the other entity (or an associate or jointventure of a member of a group ofwhich the other entity is a member).

(ili) Both entities arejoint ventures of the same third party.(1v) One entity 15 a joint venture of a third entity and the other entity is an associate of the

third entity,(v) The entity is a post-employment benefit plan for the benefit of employees of either the

repoding entity oran entity related to the reporting entity. İf the reporting entity k itselfsuch a plan, the sponsoring ernployers are aiso related to the reporting entity,

(vi) The entity 15 controlled orjointly controlled by a person identifled in (a),(vii) A person identifled in (a)(i) has signiflcant influence over the entity or Isa member of the

key management personnel of the entity (or of a parent of the entity)

Tangible Asseis

Tangible assets are carried at cost less accumulated depreciation and impairment loss if exists.Depreciation is provided over adjusted costs on a straight-line basis over the economic useflıl lives. Thedepreciarion periods for properiy, plant and equipment. which approximate the economic useful lives ofsuch assets, are as follows:

Land lmprovements 15-25Buildings 18 -40

Machinery and equipment 15-25tvıotor venıctes )

Furniture and flxtures 5 - 10Spare paris 5

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(CONVENİENCE TRANSLATİON İNTO ENGLİSH OF INTERİM FINANCİAL STATEMENTSORIGİNALLY ISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL”) unless othenvise indicated

NOTE 2 - BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (continued)

When the carning arnount of an asset is greater than iıs estimated recoverable amount, it is writtendown immediately to its recoverable amount. The recoverable amount is the higher of net selling priceor value in use. Net selling price is İlie amount obrninabie from the sale of an asset or cash-generatingunu in an arm’s Iength transaction between knowledgeable, wiiiing parties, İess the costs of disposal.Vaiue in use is the present vaiue of the future cash flows expected to be derived from an asset or cashgenerating unit plus the residual value.

Gains or losses on disposais of propertv, plant and equipment are included in the relaİed income andexpense accounts, as appropriate.

Financial Leases

Leasing — the Company as Lessee

Leases are ciassifıed as finance leases whenever the terms of the lease transfer substantially ali therisks and rewards of ownership to the iessee. Ali other İeases are classified as operating leases.

Assets heid under Fınance leases are recognized as assets of the Company at their fair value at theinception of the lease or, ifiower. at the present value of minimum lease payments. The correspondinghiabiiitv to the lesser is inciuded in the balance sheet as a finance lease obhigation. Lease payments areapportioned between finance charges and redııction of the lease obligation so as to achieve a constantrate of interest on the remaining balance of the liabihity. Finance charges are charged to profit to ioss.uniess they are directly attributabie to qualil5’ing assets in which case they are capitalized inaccordance with the Cornpany’s general pohicy on borowing costs.

Rentais payable under operating leases are charged to profit or ioss on a straight-hine basis over theterm of the relevant lease. Benetits received and receivable as an incentive to enter into an opentinglease are also spread on a straight-hine basis over the lease term. Contingent leases recognized as anexpense as incurred.

Tangible Assets ileid For Sale

According to the company rnanagement, tangible assets which are heid for sale, which the saleaccounting has been completed within 1 year from the statement of financial position date and whichthere is no active intention of holding the asset are valued with minimum of the book vaiue and thefair vaiue. The recovery of the book value doesn’t depend on the usage of the relevant tangible assetbut the saie of the tangible asset. For the tangible assets ciassifled under cıınent asseis held for sale,the depreciation provision is stopped as of the date of the classiflcation date.

Intangible Assets

Intangibie assets comprise of acquired inteiiectual propertv and computer software. They are recordedat acqııisition cost and amonized on a straight-line basis over their estimated useful hives for a periodnot exceeding 5 years froın the date of acquisition. Where an indication of irnpairment exists. thecanying amounts of any intangible assets including goodwihi are assessed and written downimmediateiy to their recoverable amount.

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETVEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraCTL”) unless otherwise indicated

NOTE 2- BASIS OF PRESENTATION OF FINANCİAL STATEMENTS (continued)

Researeh and Development Costs

Research cosıs are expensed as incurred. costs incurred on development projects (relating to the designand testing of new or improved products) are recognized as intangible assets vhen it k probable thatthe project wili be a success considering its commercial and technological feasibility and only if thecost can be measured reliably. Other development expenditures are recognized as an expense asincurred. Development costs previously recognized as an expense are not recognized as an asset insubsequent periods.

Financial lnstruments

Financial asseis

AlI tinancial assets are recognized and derecognized on a trade date where the purehase or sale of atinancial asset k under a contract whose terms require deliven of the Fınancial asset within thetimeframe established by the market concemed, and are initialiy measured at fair value, plustransaction costs except for those ünancial assets classitied as at fair value through profit or (oss,which are initially measured at fair value.

Financial assets are classifıed into the following specifled categories: fınancial assets as ‘at fair valuethrough profit or loss’ (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financialassets and ‘loans and receivables’. The classitication depends on the nature and purpose of thefinancial assets and is determined at the time of initial recognition.

Effecıive interest ınethod

The effective interest method isa method of calculating the amortized cost of a financial asset and ofallocating interest income over the relevant period. The effective interest rate is the rate that exactlydiscounis estimated future cash receipts through the expected life of the fınancial asset, or. whereappropriate. a shorter period to the net canying amount on initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those fınancialassets designated as nt FVTPL.

Receh’abk’s

Tmde receivables. and other receivables that have üxed or determinable pavments that are not quotedin an active market are classitied as receivables. Receivables are measured at amortized cost usingthe effective interest method less any impairrnent.

Borrowings

Borowings are recognized initially at the proceeds received. net of transaction cosis incured.Borrowings are subsequernlv stated at amortized cost using the effective yield method. Any differencebetween proceeds. net of tmnsaction costs, and the redemption value is recognized in the incomestatement as tinancial expense over the period of the borrowings. Borrowing costs that are directlyanributable to the acquisition. constmction or production of a quali1ng asset are capitalized as pad ofthe cost of that asset in the period in which the asset is prepared for its intended ııse or sale. AlI otlıerborrowing costs are charged to the incorne statement when they are iacurred (Note 5).

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish LiraC’TL”) unless otherwise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (continned)

Borroıı’ing costs

Borrowing costs that are directly anributable to the acquisition, construction or production of aqııalifıing asset, which requires substantial period of time to get ready for its intended use or sale, shaİlbe capitalized over the cost of the assets. Other borrowing costs shaİl be recognized as an expense in theperiod incurs.

hnyairmenı of flna,ıcial asse!s

Financial assets are reviewed for indicators of impairment at each statement of flnancial position date.Financial assets are impaired where Ihere is objective evidence that, as a result of one or more evenisthat occurred after the initial recognition of the ünancial asset, the estimated future cash flows of theinvestrnent have been impacted. For financial assets carried at amortized cost. the amount of theirnpairment is the difference between the asset’s carrving amount and the present value of estimatedfuture cash flows, discounted at the original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment İoss directly for ali financialassets with the exception of trade receivables where the carn’ing amount is reduced through the use ofan aİlowance account. When a trade receivable k uncoilectibie. it is wriuen otlagainst the aliowanceaccount.

Subsequent recoveries of amounts previously written off are credited against the aİİowance account.Changes in the canying amount of the allowance account are recognized in profit or loss.With the exception of AFS equity instruments. if, in a subsequent period. the amount of theirnpairment İoss decreases and the decrease can be related objectiveiy to an event occurring after theimpairment was recognized. the previousiy recognized impairment loss is reversed through profit orloss to the extent that the carrying amount of the investment at the date the impairment is reverseddoes not exceed what the amonized cost would have been had the impairment not been recognized.

Cash atıci cash eaııivak’nts

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highiyIiquid investments which their maturities are three months or less from date of acquisition and readiiyconvertible to a known amount of cash and are subject to an insigniflcant risk of changes in vaiue.

Mlondarv ass>ts

The fair values of balances denorninated in foreign currencies, which are transiated at year-endexchange rates, are considered to approximate carrying value.

The fair values of cash and due from banks are considered to approximate their respective canyingvalues due to their short-term nature.

The canying vaiues of trade receivables are estirnated to be their fair values due to the eiimination ofthe credit Fınance incorne.

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NOTE 2- BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (continucd)

Financial liabilities

Financial Iiabilities and equity instruments issued by the Company are ciassifled according to thesubstance of the contractuaİ arrangements entered into and the definitions of a fınancial liability andan equity instrument. An equity instrument is any contract Ihat evidences a residuaİ interest in theassets of the Company after deducting al! of its Iiabiliıies. The accoıınting policies adopted for specificfınancial liabilities and equity insirumenıs are set mit below.

Financial Iiabiliıies are classifıed as either fınanciai Iiabilities at FVTPL or other financial Iiabilities.

Pv[onetarv liabilitk’s

Fair value of bank loans and other monetaıy liabiİities approximates to their canying amount sincethey are short term İiabiİities. Fair value of items denominated in foreign currencies and translated atthe rates prevailing at the balance sheet date approximates to their carrying amoıınt. Trade payablesare stated at fair value.

Effects of changes in foreign currency

The Company’s financial statements are presented in the currency of primaıy economic environment(its Functional currency) in which it operates. The Company’s fınancial condition and operatingresults, the Company’s functional currency and presentalion currency for financial statements areexpressed in TL.

During the preparation of fınancial statements, transactions on foreign curency (curencies other thanTL) are recorded on the base of currencies on transaction date. Monetaıy assets and Iiabilitiesdenominated in foreign currencies on balance sheet translated into Turkish Lira using exchange ratesprevailing on the staiement of financial position dale. None-monetan’ items carried at fair valııe that isbeing monitored are denominated in foreign currencv, are retranslated into TL al the rates prevailingon the date fair value determined. None-monetarv items measured in terms of hislorical cost in aforeign cureney are not retransiated.

Exchange differences, except as specifıed below, are recognized in profit or loss in the period inwhich:

• Foreign exchange gaiıı/losses related to assets under construction for future productive use, andincluded as an adjustment to interest costs and added on cost of those assets,

• Hedging transaction foreign cunency risks (hedging accounting policies are described below),

• Foreign exchange ditlerences forming pan of the foreign operation net investment. accoııntedunder reserves, associated with proflt or Ioss on sale of the net investment, arising frominternational activity debt and receivables without intention or possibility ofany payment.

The Company’s assets and Iiabilities of foreign operations are expressed in TRY ıısing exchange ratesprevailing on the statement of fınancial position date in the fınancial statements. Income and expenseiteıns. unless exchange rates Huctuates signifıcantİy nt the dates of the transactions in the period (incase of major fluctuations. exchange rates at the transaction date is used) are translated using averageexchange mtes during the period. Exchange differences are recognized in other comprehensive incorneand accurnulated equity in a separate component.

20

(CONVENİ£NCE TRANSLATİON İNTO ENCLISH OF İNTERIM FİNANCİAL STATEMENTS ORİCINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL”) unless othenvise indicated

NOTE 2- BASIS OF PRESENTATİON OF FINANCIAL STATEMENTS (continned)

Earnings per Share

Eamings per share disclosed in the accompanying statement of income are determined by dividing netincome by the weighted avemge number of shares in existence during the period concemed. in Turkey,companles can increase their share capital by making a pro-rata distribution of shares (“bonus shares”) toexisting slıareholders frorn retained eamings. For the purpose of eamings per share computations, theweighred average number of shares outstanding during the year has been adjıısted in respect of bonusshares issued without a con-esponding change in resources, by giving thern a retroactive effect for theperiod in which İhey were issued and each previons year.

Provisions, Contingent Assets and Liabilities

Provisions are recognized when the Company has a present legal or constructive obligation as a result ofpast events and it is probable that an outflow of resources will be required to senle the obligation andareliable estimate of the arnount can be made.

A possible obiigation or asset that arises from past events and whose existence wiil be confirmed only bythe occurrence or non-occurrence of one or more uncertain future events not whoily within the control ofilie Company have not been recognized in the accompanying jinancial staternents and treated ascontingent liabilities and contingent assets.

Government Grants

Govcrnrnent incentives are not reflected in the financial statements; without the business fulfllment ofthe necessaıy conditions for obtaining that incentive which wiil and a reasonable assurance that theyshall be obtained.

Governrnent grants, intended to meet the costs of these incentives are reflected as an expense in profıtor Ioss in a systematic rnanner throughout the periods. The govemment grants as a financing bol,rather than being accounted as a net off item profit or Ioss. should be associated with the statement oftinancial position (balance sheet) as uneamed incorne. should be reflected in ü systematic manner inprolit or loss during the economic life of the related assets.

Government incentives giyen in order to meet expenses or losses previously realized and to provideemergency financial support without any cost in the future are recognized in profit or Ioss when itbecomes liveable.

Loans obtained from the state lower than market interest rate, is considered to be government grants.Benefit from lower interest rates is calculated as the difference between the initial carning amountand the gains of the ban during the period.

The Company benefits from research and development (“R8LD”) grants within the scope of theCornmuniqtı No: 98/10 of The Scientifıc and Technobogical Research Council of Turkey(“TÜBİTAK”) and Monev Credit and Coordination Board related to RD grants for its research anddevelopment projects giyen that such projccts satis1 specific criteria with respect to the evaluation ofTUBITAK Technology Monitoring and Evalııation Board.

21

(CONVENİENCE TRANSLATİON İNTO ENGLİSH OF İNTERIM FINANCİAL STATEMENTS ORICINALLYISSUED İN TURKKSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PEIUODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) un!ess otherwise indicated


The govemment grants are recognized when there is reasonable assumnce that the Company wiilcompiy with the conditions auached to thern and that the grants ‘vii! be received. The portion ofgovemrnent grants associated to previously capitalize intangibie asseh k deducted frorn the cost of theintangibie asset. whereas the other govemment grants are recognized as income in the period whichthey are incurred.

Jnvestment Property

Land and m coıırse of business are ciassifled as investrnent property and carled at cost lessaccurnıılated depreciation (except land) under the cost method. The cost of a self-constructedinvestrnent property k determined as its cost at the date when the constrııction or development iscomplete. On that date the subject asset qualifies as an investment property and thus transferred İoinvestrnent properties class. The useful life estimation for the buildings within investrnent properties kbetween 1 8-40 years.

Provision for Employment Termination Benefits

Severance Payments:

Under the Turkish iaw and union agreements, lurnp surn payrnents are made to empioyees in retiringor involuntadly leaving the Company. Such payments are considered as being part of definedretirement benefit plan as per international Accounting Standard No: 19 (revised) “EmployeeBenefıts” (“TAS 19”).

The liabiiity for empioyment terrnination beneflts recognized in the fınancial staternents wascalculated according to the curent net vaiııe of the Iiabilitv amounts expected to occur in the Futuredue to retirement of employees and was retlected on the tinancial staternenıs. Ali calcuiated actuarialgains and losses are reflected on the fund of gains/losses due to employee termination benefits underequity.

Liabilities arising from unused ieave rights defıned as “shofl-terrn provisions regarding employeebenefits” are accrued in the period in which the right is gained and recognized after being discountediftheir impact is rnaterial.

Taxation and Deferred Taxes

Tax expense consists of totai current tax and deferred tax benefit / (expense).

C’ıırrent tat

The tax currentiy payable is based on taxabie profit for the year. Taxable profıt differs from profit asreporled in the incorne statement because it exciudes items of income or expense that are laxabie ordeductible in other vears and it further excludes items that are never taxable or deductible. TheCornpany’s liability for current tax is calcuiated using tax rates that have been enacted or sııbstantiveiyenacted by the statement of financiai position date.

22

<CONVENIENCE TRANSLATİON INTO CNCL(SH OF İNTERIM FIN.4NCIAL STATEMENTS OR(GINALLYİSSUED İN TURRİSH)



NOTE 2- BASİS OF PRESENTATİON OF FINANCİAL STATEMENTS (continued)

Deferred TCLVCS

Defered tax is recognized on differences between the carrying amounts of assets and Iiabilities in theflnancial stalements and the corresponding tıx bases which 15 used in the computation of taxableprofit, and is accounted for using the statemeni of financial position Deferred tax llabilities aregenerally recognized for al! taxable temporaiy differences and deferred tax assets are recognized foral! deductible temporaiy differences to the extent that it is probable that taxabie proFıts vi!l beavailable against which those deductible temporaıy differences can be utilized. Such deferred taxassets and !iabilities are not recognized if the temporary difference arises from goodwill er from theinitial recognition (other t!ıan in a business combination) of other assets and liabilitles in a transactionthat affects neither the taxable profit nor the accounting profit.

Deferred tax liabilitles are reeognized for taxable temporary differences associated with investments insubsidiaries and associates. and interests in joint ventures, except where the Company is able tocontrol the reversal of the temporaıy difference and it is probable that the temporaiy difference wiilnot reverse in the foreseeable future. Deferred tax assets arising from deductible temporaiy difYerencesassociated with such investments and interests are oniy recognized to the extent that it is probable thatthere wiil be suffıcient taxable proflts against which to utilize the benetits of the temporaiy differencesand they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date andreduced to the extent that it is ne longer probable that sufticient taxable profits %vi!! be available toallow al! or part of the asset to be recovered.

Deferred tax assets and Iiabilities are measured at the tax rates that are expected to app!y in the periodin which the liability is seftled or the asset realized, based on tax rates (and tax laws) that have beenenacted or substantive!y enacted by the statement of financial position dale. The measurement ofdeferred tax liabilitles and assets reflects the tax consequences that would follow from the manner inwhich the Company expects, nt the slntement of financial position date, to recover or sett!e thecanying amount of its assets and Iiabilities.

Deferred tax assets and liabilities are offset when there is a legaliy enforceable right in set oli currenttax assets against current tax !iabilities and when they relate to income taxes levied by the sametaxation authoriry and the Company inıends to senle ils current tax assets and liabilitles on a net basis.

Curren! and deferred ICLY for the vear

The current tax or the deferred tax for the current year k accounted as expense or incorne under theincome table.

Share Capital and Dividends

Ordinary shares are ciassifled as equily. Dividends on ordinary shares are recognized in eqııity bydeducting frorn retained eamings in the year in which Ihey are deciared.

23

(CONVENIENCE TRINSLATİON INTO ENCLISH OF INTERİM FİNANCİAL STATEMENTS ORIGNALLYİSSL£D İN TLRKJSH)

SASA r0LYE5TER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounıs expressed in thousands of Turkish LIraCTL”) unless otherwise indicated

NOTE 2 - BASIS OF PRESENTATİON OF FINANCİAL STATEMENTS (continued)

Rcstricted Reserves

Restricted reserves are allocated from profıt of previous year due tü obligation arising from Iaw or theCompanys articles or objects excluding profit distribııtion (etc. tax advantage for gam on sale ofsubsidiaries). These reserves are carried at tlıeir statutoıy amounts.

Reporting of cash flows

in the statements of cash flows, cash flows are ciassifled and reported according to their operating,investing and financing activities.

Subsequent events

Post period-end events that provide additional information about the Company’s position at thebalance sheet date (adjusting events). are reflected in the financial statements. Post-period-end eventsthat are not adjusting events are disclosed in the notes when material.

NOTE 3- CASH AND CASH EQUIVALENTS

30 June 2015 31 December 2014

Cash on hand 3 4

Banks 57.236 13.982

-Foreign currency demand deposits 10.343 2.060

- TL demand deposits 25.564 122

-Foreign currencv time deposits (t) 21.329 -

- TL time deposits - 11.800

57.239 13.986

(t)There k not any pledge on banks as of 30 June 2015 and 31 December 2014.

(*) USD is a time deposit that rnaturity is 1 day and interest rate is 0,55 % . (31 December 2014- TRY%10.15)

NOTE 4- FINANCİAL ASSETS

None.

24

(CONVENİENCE TRANSLATİON INTO ENGLİSH OF INTERIM PINANCİAL STATEMENTS ORIGINALLYİSSL’ED İN TLRKİSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraQ’TL”) unless otherwise indkated

NOTE 5- BORROWINGS

Short term borrowings30 June 2015 31 December 2014

Short-term bank borrowings 185.891 195.611

Cıırrent portion of Iong-term borrowings 2.170 4.231

Short-term borrowings 188.061 199.842

Long-term borrowings30 June 2015 31 December 2014

Long-term bnnk borrowings 2.000 4.000

Long-term borrowings 2.000 4.000

Foreign curreney denominated bank borrowings and corresponding interest expense accruals as at 30June 2015 and 31 December 20! 4 are as follows:

Principal 30 June 2015 31 December 2014

Weighted WeightcdAverage Average

Effective EffectiveInterest Rates Original Interest Original

Original Currency Amount TL Rates % Amount TL

TL 9,64 - 43.539 10,26 - 63.119

USD 1,33 44.500.000 119.539 1,50 58.137.581 134.813EURO 1,06 6.500.000 25.349 - - -

188.427 197.932

Accrued Interest

TL - 1.634 - 5.823

LSD - - 38 87

190.061 203.842

25

(CONVENİENCE TRANSLATİON INTO ENGLISH OF INTERİM FINANCİAL STATEMENTS ORİGİNALLYİSSUED İN TURKİSH)



NOTE 6- TRADE RECEİVABLES AND TRADE PAYABLES

Trade Receivables


Trade receivables (*) 212.656 177.182

Cheques received (**) 42.935 57.457Receivables from related parties (Note 29) 56 -

Provision for doubiful receivables (3.433) (3.282)

252.214 231.357

() As of 30 June 2015 nde receivables are discounted by 0,81% for TL, 0,13% for USD.0.13% for ELR. (As of 31 December 2014 0.84% for TL, 0,13% for USD. 0,13% for EUR).

(**) Clıeques received constitute the cheques obtained from customers and kepi in portfolio as aresult of trade activities and consist of TL 27.434 with maturities of Iess than three monıhs (31December 2014: TL 24.610).

Non-current trade receivables

Trade Receivables


Trade Receivables - 4.294

- 4.294

As of3O iune 2015 and 31 December 2014. past due but not impaired trade receivables as follows:

Overdue Period 30 June 2015 31 December 2014

0-! mondı 10.121 12.156

1 -3 months 920 1.714

Over 3 rnonths 498 196

Total 11.539 14.066

As of3O June 2015 and 31 December 2014, due to existence ofreceivable insurance, baıık guarantec,morigage and other gııarantees (i.e. clıeques), the Company has not recorded any provision relation totrade receivables that were past due but not impaired.

26

(CONVENIENCE TRANSLATİON INTO ENCLISH OF İNTERIM FINANCİAL STATEMENTS ORİGINALLYISSLED İN TURKJSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERIODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraCTL”) unless otherwise indicated

NOTE 6- TRADE RECEİVABLES AND TRADE PAYABLES (continued)

The anaiysis of past due and impaired irade receivables are as follows:

Over Period 30 June 2015 31 December 2014

3-6months 151

Over 6 months 3.282 3.282

Total 3.433 3.282

The movements of the provision for doubtful receivables during the period are as follows:

1 Jarıuary -30 June 1 January -30 June

2015 2014

Balance al 1 January (3.282) (3.033)

Charged for the period (Note 24) (1 5 1) (374)

Balance al 30 June (3.433) (3.407)

Trade Payables


Trade Payables 154.782 101.824

Accrued expenses 5.556 1.705

Due to related parties (Note 29) 2 9.374

160.340 112.903

As of3O June 2015 trade payables are discounted by using 0,84% for TL. 0.13% for USD, 0,13% forEUR.(As of 31 December 2014 0,84% for TL, 0.13% for USD, 0,13% for EUR).

As of3O June, 2015 average turnover for trade receivables and trade payables are 73 days and 76 days,respectively (31 December 2014: 85 days and 78 days respectively).

27

<CONV£NİENC£ TRANSLATİON INTO ENGLISH OF INTERIM FİNANCİAL STAT£MCNTS ORIGINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PEİUODBETWEEN 1 JANUARY -30 .mNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 7- ENWLOYEE BENEFIT OBLIGATİONS

Liahilities for employee benefits


Social security and taxes payable 2.461 2.323

Due to personnel 2.018 936

4.479 3.259

NOTE 8- OTHER RECEİVABLES AND PAYABLES

Other Current Receivables


Other receivables 1.094 1.535

iobadvance 65 270

Deposits and guarantees - 1.362Receivables from government agencies - 10

1.259 3.177

Due from related parties (Note 29) - 327

1.259 3.504

Other Non-Current Receivables


Deposits and guarantees 60 60

60 60

28

(CONVENIENCE TRANSLATİON INTO ENGLISH OF INTERIM FİNANCİAL STATEIENTS ORİCİNALLYİSSUED İN TURKISH)



NOTE 8- OTHER RECEİVABLES AND PAYABLES (continued)

Other Payables


Advances received from customers 713 620

Cancellation of VAT 612 557

Taxespayables 905 418

Due to related party (Nole 29) - 10

Other 9 92

2.239 1.697

NOTE 9- INVENTORIES


Raw materials and supplies 102.672 67.590

Intermediate goods 66.395 75.423

Finished goods 29.982 38.218

By-products (*) 4.120 3.024

Semi-finished goods 4.113 3.094

Spare parts 3.094 2.768

Otlıer 3.088 2.505

Less: Impairmcnt in valuc of inventories (*9 (13.287) (9.535)

200.177 183.087

(*) Bv-products are not subject lo irnpuirment since they are laken in inventories wiih selling prices.

(*9 Irnpairment has been allocated to finished goods. intermediate goods and other inventories.

29

(CONVENIENCE TRANSLATİON INTO ENGLİSH OF İNTERIM FINANCİAL STATEMENTS ORİGİNALLYISSUED İN TURKISH)



NOTE 9— INVENTORIES (continued)

Movement of Provision for Impairment of Inventories

1 January 30 June 1 January - 30 June2015 2014

Balance at 1 January (9.535) (1.273)

Charged for the period (Note 2!) (3.752) (2.600)

Balance at 30 June (13.287) (3.873)

The Company has inereased TRY 3.752 of its provision for impairrnent of inventories which wasamounting TRY 9.535 and therefore reahized allowance for impairment in cıırrent year for TRY13.287. As of 30 June 2015, total inventoıy accounted with net realizable value is TL 109.664 TRY(3! December 2014: TL 123.176).

NOTE 10— PREPAW EXPENSES

Prepaid Expenses (Short-term)


Prepaid insurance expenses 3.576 -

Revision expenses 566 241Prepaid personnel expenses 147 -

Other prepaid expenses 589 -

4.878 241

Prepaid Expenses (Long-term)


Long-term prepaid expenses 39 79Advance for constrııction in progress - 775

39 854

30

(CONVENIENCE TR4NSLATION INTO £NCLISH OF INTERIM FINANC!AL STATEMENTS ORICINALLYISSULO İN TURKISH)


EXPLANATORY NOTES TO THE FINANC1AL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL’) unless othenvise indicated

NOTE Il- INVESTMENT PROPERTIES

The movement schedules of investment properties and related accumulated depreciation for the yearsended 30 June 2015 and 2014 are as follows:

1 January Other 30 June

2015 Additions Transfers Disposal 2015

CostLand 5 - - - 5Buildings 3.780 - - - 3.780

3.785 - - - 3.785

Accumulated DepreciationBuildiııg 2.746 94 - - 2.840

Net Book Value 1.039 945

As of 30 June 2015 the Company has leased properties with the net book value ofTL 945 (30 June 2014:TL 1 . 134) to the third padies through lease agreements.

The Company has generated rent incorne of TL 227 (30 June 2014: TL 208) throughout the periodresulting from these lease agreements (Note 24). The fair value of factoıy bullding was carried outaccording to the discounted cash flow and has been calculated TL 4.684(3! December 2014: TL 4.622)with infiation rate is 5% ,discount rate is %10,02.

1 January Other 30 June

2014 Additions Transfers Disposa! 2013

CostLand 5 - - - 5Buildings 3.780 - - - 3.780

3.785 - - - 3.785

Accumulated DepreciationBuilding 2.556 95 - - 2.65!

Net Book Value 1.229 1.134

The total depreciation for the period ended 30 June 2015 and 2014 is presented in Note 12.

31

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NOTE 12- PROPERTY, PLANT AND EQUIPMENT

The movemenr schedules of property, plant and equipment

30 June 2015 and 2014 are as follows;

1 January

2015

and related accumulated depreciation for

30 June

2015

(9 Spare parts amounting to TL 8.909 presented in inventoıy account has transferred as of 1 Januaıy

2014. Impairment anaiysis made for spare parts, asa result of this anaiysis impairment amounting TL

6.195 is booked under other operating expenses (Note 24) in the financial staternents.

Addkons (*) Transfers Impairment Disposais

Cost

Land 15.537 10.227 - - - 25.764

Land Improvements 7.179 - - - - 7. 179

Buildings 59.829 2.499 - - - 62.328

Machinery and equipment (*) 401.772 1.165 2.957 (8.909) (24) 396.961

Motor vehicles 1 .785 - - - 1.785

Furniture and flxtures 5.083 183 - - (2) 5.264

Construction in progress 1.832 2.724 (2.957) - - 1.599

493.017 16.798 - (8.909) (26) 500.880

Accumulated depreciation

Land Improvements 5.772 203 - - - 5.975

Buildings 10.061 1.500 - - - 41.561

Machinery and equipment 300.752 4i47 - (2.714) (24) 302.561

Motor vehicles 1 .684 12 - - - 1.696

Fumiture and Fıxtures 3.900 165 - - - 4.065

352.169 6.427 - <2.714) (24) 355.858

Net hook value 140.848 145.022

9.5—

(CONVENIENCE TRANSLATİON İNTO ENGLISH OF INTERIM FINANCİAL STATEMENTS ORİGINALLYISSUED İN TURKİSH)

SASA r0LYEsTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 12- PROPERTY, PLANT AND EQUWMENT (continued)

Transfers fromconstructionin proress

As of3O June 2015 and 2014 the Company does not acquired propeny, plant and equipment lhroughfınance leases. As of 30 June 2015 and 2014 there is no blockage or pledge on properiy. plant andequipment.

(*) Spare paris amounting to TL 8.909 preserned in inventor account has tmnsferred and amortizedasofi Januaıy 2014.

As of3O June 2015 and 2014, total depreciation and amortization charges for the period between andthe related income statement accounts are as follows:

Cost of production (Note 2 1)Researeh expense (Note 22)General adıninistrative expenses (Note 22)Selling, marketing and distribution expenses (Note 22)

1 January 30 June

2013 Additions Impairment Disposais 2014

Cost

Land 15.537 - - - . 15.537

Land Improvements 7.179 - - - . 7. 179

Buildings 59.829 - - - . 59.829

Machinery and equipment (t) 386.837 9.467 4.984 - 401.288

Motor vehicles 1,780 - - . - 1.780

Furniture and flxtures 5.641 26 - . - 5.667

Constmction in progress 6.288 169 (4.984) - 1.473

483.092 9.662 - - - 492.753


Land lmprovements 5.366 203 - - - 5.569

Buildings 37.110 1.475 - - - 38.585

Machineıy and equipment 284.103 8.237 . - - 292.340

Motor vehicles 1.661 Il - - - 1.672

Fumiture and tixtures 3.236 167 - - - 4.403

332.475 10.093 - - - 342.569

Net bookvalue 150.617 150.185

1 Ocak-

30 Haziran 2015

1 Ocak-

30 Haziran 2014

5.441 9.127721 819548 487282 285

6.992 10.718

33

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EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 SEiNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 13- INTANGIBLE ASSETS

The movement sehedules of intangible assets and related accumulated depreciation for the year ended30 June 2015 and 2014 are as follows:

1 January Transfers from 30 .Juneconstruction

2015 Additions in progress Disposals 2015Cost

Rights 5.928 526 - - 6.454Development costs 7.600 - - - 7.600

13.528 526 - - 14.054

Accumulated amortisation

Rights 4.662 247 - - 4.909Development costs 6.443 310 - - 6.753

11.105 557 - - 11.662

Net book value 2.423 2.392

1 January Transfers from 30 Juneconstruction

2014 Additions in progress Disposais 2014Cost

Rights 5.249 578 - - 5.827Development costs 7.600 - - - 7.600

12.849 578 - - 13.427

Accumulated amortisation

Rights 4.275 186 - - 4.461Development costs 5.709 408 - - 6.1 17

9.984 594 - - 10.578

Net book value 2.865 2.849

The total amortization for the year ended 30 June 2015 and 2014 15 presented in Note 12.

34

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NOTE 14- ASSET HELD FOR SALE

The movement schedules of asset held forended 30 itıne 2015 and 2014 are as follows:

sale and related accumulated depreciation for the year

1 January Transfers to2015 Additions tangible assets Disposals 3OJune 2015

CostLand İ4 - - - 14

Land İmprovements 1.045 - - - 1.045

Buildings 6.538 - - - 6.538

Machinery and equipment 13.595 - - (926) 12.669

Motor vehicles 224 - - - 224

Fumiture and fıxtures 290 - - - 290

21.706 - - (926) 20.781


Land İmprovements 819 - - - 819

Buildings 4.154 - - - 4.154

Machinery and equipment 10.176 - - (763) 9.4 İ 3


Fumiture and fıxtures 276 - - - 276

15.649 - - (763) 14.886

Net bookvalue 6.057 (163) 5.895

The rnanagement continues to disposal activities on asset held for sale.

35

(CONVENIENCE TRANSLATİON İNTO ENCLISH OF INTERIM FINANCİAL STATEMENTS ORIGINALLYISSUED İN TURKİSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Lirac’TL”) unless otherwise indicated

NOTE 13— ASSET HELD FOR SALE (conünued)

1 January Transfers to2014 Addilions tangiblc assets Disposais 3OJune 2014

Cost

Land 14 - . - 14

Land İmprovements 1.045 - - - 1.045

Buildings 6.538 - - - 6538

Machinery and equipmenl 14.866 - (225) - 14.641


Fumimre and flxtures 332 - - - 332

Construction in progress - - - - -

23.019 - (225) - 22.794

Accumula(ed depreciation -

Land Improvements 819 - - - 819

Buildings 4.154 - - - 4.154

Machineıy and equipment 10.932 - (64) - 10.868

Motor vehicles 224 - . . 223

Fumiture and fıxtures 3 1 8 - - - 3 18

16.437 - (64) - 16.383

Net boolc valuc 6.572 6.411

NOTE 15- PROVISİONS, CONTINGENT ASSETS AND LIABILITIES


Provision for restrucring and demand of other

receivables(*) 819 675

Other - 30

819 705

(*) Provision for restructuring and demand of otlıer receivables are consisting of reinstatements

Iawsuiıs wlıich were filed by ex-workers against to the Company due to changes of business

organizations and possible expenses of other receivables Iawsuits. Such Iawsuits are pending as of

balance sheet date.

36

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NOTE 15— PROVISİONS, CONTESGENT ASSETS AND LIABILITIES (continued)

Provision for restructuring expenses and other receivables

1 January -30 June 1 January -30 June2015 2014

Balance at 1 January 675 1.364

Charged for the period (Note 24) 234 89Allowance released (90) (501)

Balance al 30 June 819 952

NOTE 16- COMMITMENTS

Commitments and contingencies, which are not included in the liabilities at 30 June 2015 and 31December 2014, are as follows:

Commitments based on export incentive certificates


The total amount of export commitment of documentsstored in the document 2.163.426 1.512.320

The amount mentioned include commitments based onexport ineentivecertiflcate which are presentiy fulIfılledbut the ciosing transactions are not coneluded yet 1.360.538 928.476

Total amount of open export incentives 802.889 583.844Open export incentives 303.180 93.520

37

(CONVENIENCE TRANSLATİON INTO ENGLİSH OF INTERIM FİNANCİAL STATEMENTS ORİGİNALLYISSUED İN TURKİSH)


EXPLANATORY NOTES TO THE FİNANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 16- COMMITMENTS (continued)

Collaterals, pledges and mortgages ‘CPM’ giyen by the Company


TL Equivalen

Equivalent TL USD Luro t TL USD Eun

A.CPMs giyen in thename of its ownlegal personality 1 %4.338 33.484 44.500.000 10.500.000 159.910 26.729 55.000.000 2.000.000

B.CPMs giyen on hehaif ofthe fully eonsolidatedeompanies

C.CPMS giyen on behalfofthird parties for ordinrnyeourse of the business

D.Total amount of otherCPMs giyen

Total amount of CI’Msgiyen on hehalf of themajority shareholdcr

Total amount ofCPMsgiyen on behalfofothergroup companies whichare not in seope of B andc- Total amount of CPMsgiyen on hehalfofthirdparties which are not inseope ofC

Total CPM Amount 184.338 33.484 44.500.000 10.500.000 159.910 26.729 55.000.000 2.000.000

As of3O June 2015 the percentage of the other CPM’s giyen by the Company to the total equity is 0%(31 December 2014: 0%).

Mortgages and guarantees taken nt 30 June 2015 and 3! December 2014 are as follows:

30 June 2015 3! December 2014

Letters of guarantees taken 14.483 14.342

Cheqııes and notes of guarantees taken 1.719 2.274Mortgages taken 234 234

Total 16.436 16.850

38

(CONVENIENCE TRANSLATİON İNTO ENGLISH OF INTERIM FİNANCİAL STATEMENTS ORIGINALLYISSUED İN TURKISH)



NOTE 17- EMPLOYEE BENEFİİS

Short term empioyec benefıts


Provision for personnel expense 578Premiurns for senior rnanagement 2.500 2.500

3.078 2.500

Long term employee benefiis


Provision for employment termination benefits 19.597 18.446

Unused vacation allowance 2.164 1.856

21.761 20.302

Unused Vacation Allowance

Company provides annual pay vacation to each employee who has completed one year of seıwice.

Movements of unused vacation allowances as follows:1 Januarv -30 June 1 Januarv -30 June

2015 2014

Balance of 1 January 1.856 1.618

Charge for the period (Note 24) 308 277

Batance at 30 June 2.164 1.895

Movernents ofpremiurns for senior management are as follows:

t January -30 June t January -30 June2015 2014

Balance of t Januaıy 2.500 150

Charge for the period 1.247 850

Allowance released (1.247) (1.000)

Balance at 30 June 2.500 -

39

(CONVENIENCE TRANSLATİON İNTO ENCLISH OF İNTERIM HNANCIAL STATEMENTS ORIGINALLYISSUKO İN TURKISH)

SASA POLVESTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish LiraC’TL”) unless othenvise indicated

NOTE 17- EMPLOYEE BENEFITS (continned)

Provision for emylovment termination benefits

There are no agreements for pension commitments other than the legal requirement as explainedbe 10w.

Under Turkish Labor Law, the Company 15 required to pay termination beneflts to each ernployee whohas completed one year of service and whose employment is terminated without due cause excluding25/2 article of labor law, is called up for militaıy service or dies. As of 8 September 1999 relared laborlaw was changed and retirement requirements made gradual. The amount payable consist of one grosswage for each year of service himited to rnaximum termination indemnity for non-union employeesand 47 days gross wage for each year of service himited to maximurn termination indemnity for unionemployees. Same payment is done for days remaining from 1 year.

The liability k not fiinded, as there k no funding requirement.

The reserve has been calculated by estimating the present value of the future probable obligation of theCompany arising from the retirement of the employees.

TFRS requires actuarial valuation methods to be developed to estimate the enterprise’s obligationunder defined benefit plans. Accordingly following actuarial assumptions were used in the calculationof the total liability.


Discount rate (%) 3,8! 3.8!Retention rate to estirnate the probability of retirement 98 98

Discount rate is derived upon the difference of long-term interest’s rates in TL and the expectedinfiation rate.

The principal assumption is that maximum liability for each year of service wiil inerease in line withinfiation. Thus, the discount rate applied represents the expected real rate after adjusting for theanticipated effects of future infiation. The maximum amount oFTL 3,71 (1 July 2014: TL 3,60), whichis expected to be effective from 1 Ju!y 2015. has been taken into consideration in calculating theprovision for emp!ovment termination beneflts of the Cornpanv.

Movements in the resene for emp!oyment termination benefits are as fol!ows:

1 .January -30 June 1 January -30 June2015 2014

Balance of 1 .January 18.446 16.200

Charge for the period 2.745 1.513Allowance released (1.594) (1.230)

Balance al 30 June 19.597 16.483

40

(CONVENİENCE TRANSLATİON INTO ENGLİSH OF İNTERİM FİNANCİAL STATEMENTS ORİGİNALLYİSSUED İN TURKISH)



NOTE 18- OTHER ASSETS AND LIABILITIES

Other Current Assets


VAT Receivables due to export 6.673 10.533

Valuc added tax (‘VAT”) 2.297 1.137

Deferred SCT 483 664

9.453 12.334

Other Non-Current Assets


Deferred VAT (*) 54.056 59.766

54.056 59.766

(*) The company has reciassifled VAT amount which is estimated to not use in short term period undercıırrent assets.

NOTE 19- DERIVATWE INSTRUMENTS

None

41

(CONVENİENCE TRANSLATİON INTO ENGLISH OF INTERİM FİNANCİAL STATEMENTS ORİCİNALLYISSUED İN TURKİSU)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 ilİNE 2015(Amounts expressed in thousands of Turkish LiraÇ’TL”) unless otherwise indicated

NOTE 20- SHAREHOLDERS’ EQUITY

Sasa Polyester Sanayi A.Ş fully paid and issııed capital each KR 1 nominal value of 21.630.000.000shares (31 December 2014: 21.630.000.000). The shareholders and shareholding structure of theCompany at 30 June 2015 and 3 l December 2014 are as follows:

30 .June 2015 31 December 2014

TL Share TL Share

Erdemoğlu Holding A.Ş. (t) 110.313 51 - -

Sabancı Holding A.Ş. (t) -

- 110.313 5!Public Offered 105.987 49 105.987 49

216.300 100 216.300 100

Infiation adjustment to sharecapital(tt) 196.213 196.213

412.513 412.513

(t) Hacı Ömer Sabancı Holding A.Ş sold alI shares in SASA Polyester Sanayi A.Ş with anominal value of 110.313.001,18 TL corresponding to 51 % of the share capital of theCompany, to Erdemoğlu Holding A.Ş. with the cost of USD 104.189.990; the transfer ofshares took place on 30 April 2015. Erdemoğlu Holding A.Ş. has made the share purchasetransaction between 14 July 2015 and 4 August 2015 in accordance with Capital MarketsBoard’s 11.26.1 takeover bids communiqu. At the end of takeover bids, ErdemoğluHolding ratio of shares owned by Sasa Polyester Sanayi A.Ş. has reached 84,80% and anominal amount of TL 183.430.724,77.

(t*) Adjustment to share capital represents the restatement effect of cash contributions to sharecapital at year-end equivalent pıırchasing power after netting of prior year losses.

Shareholders’ equity items of company as at 30 June 2015 and 31 December 2014 prepared inaccordance with the Communiqu No: Xl-29 are as follows:


Slıare capital 216.300 216.300Infiation adjustment to share capital 196.213 196.213Restricted reserves 5.963 5.356

Accumulated loss (96.067) (166.840)Actuarial gam / (loss) (2.073) (2.073)Net (Ioss) / profit for the period 40.412 71.380

Shareholders’ Equity 360.748 320.336

42

(CONVENİENCE TRANSLATİON İNTO ENGLISH OF INTERİM FİNANCİAL STATEMENTS ORİGİNALLYİSSUED İN TURKISH)



NOTE 20- SHAREHOLDERS’ EQUITY (continued)

The legal resenes consist of first and second resen’es. appropriated in accordance with the TurkishCommercial Code (TCC”). The TCC stipulates that the first legal resen’e is appropriated out ofstatutoıy profits aL the rate of 5% per annıım until the total resene reaches 20% of the Company’spaid-in slıare capital. The second legal resen’e is appropriated at the rate of 10% per annum ofali cashdistributions in excess of 5% of the paid-in share capital.

In accordance with the CMB’s requirements which vere etlective until 1 Ianuary 2008. the amountgenerated from first-time application of inflation adjustments on financial statements, and followedunder the “accumulated loss” item was taken into consideration as a reduction in the calculation ofprofit distribution based on the inflation adjusted financial statements within the scope of the CMB’sregulation issued on profit distribution. The related amount that was followed under the “accumulatedIoss” item could also be offset against the profit for the period (if any) and undistributed retainedearnings and the remaining loss amount could be offset against capital reserves arising from therestatement of extraordinaıy reserves, legal reserves and equity items, respectively.

in addition, in accordance with the CMB’s requirements which were effective until 1 Januaıy 2008, atthe first-time application of infiation adjustments on financial statements, equity items, namelyCapital issue premiums”, “Legal reserves”, “Statutory reserves”, “Special reserves” and‘Extraordinary reserves” ıvere carried at nominal value in the balance sheet and restatementdifferences of such items ıvere presented in equity under the “Shareholders’ equity inflationrestatement differences” line item in aggregate. “Shareholders’ equity infiacion restatementdifferences” related to alI equity items could oniy be subject to the capital increase by bonus issue orloss deduction, while the canying value of extraordinary reserves could be subject to the capitalincrease by bonus issue; cash profit distribution or Ioss offsetting.

in accordance with the Communiqu No: Xl-29 and related announcements of CMB. effective from1 Januan 2008. “Share capital”, “Restricted Resen’es” and “Share Premiums” shall be carried at theirstatutory amounts. The valuation difTerences as part ofTAS/TFRS shall be disclosed as fohiows:

-it dıe difference is arising due to the infiation adjustment of “Paid-in Capiral’ and not yet beentransferred to capital should be classified ıınder the “Inilation Adjustment to Share Capital”;

- if the ditlerence is due in the infiation adjustment of”Restricted Reserves” and ‘Share Premium” andthe amount has not been utihized in dividend distribution or capital increase yet, it shall be elassifledunder “Retained Earnings’.

There is no other usage other than the addition ofcapitai adjııstment differences to the capital.

43

(CONVENİENCE TRANSLATİON INTO ENGLISH OF İNTERIM FİNANCAL STATEMENTS ORIGINALLYISSUED İN TURKİSH)

SASA rOLYESTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish Lira(”TU’) unless othenvise indicated

NOTE 20- SHAREHOLDERS’ EQUITY (continued)

Dividend Distribution

Listed companles shall distribute their profıt in accordance with the Capital Market Board’sCommuniqu on Dividends 11-19.1 which is effective frorn 1 Februaıy 2014.

Companles shall distribute their protits as part of the profit distribution policies to be determined bytlıeir general assernblies and in accordance with the related regulation provisions. A minimumdistribution rate has not been determined in ihese regulations. The companies pay dividends asdetermined in their main agreemenıs or profit distribution policies. Furthermore, dividenös may bepaid in instalrnents with same or different amounts and proflt share advances may be distributed overthe profit in ilie interim flnancial statements.

in accordance with the Turkish Commercial Code (TCC), no decision may be made to set aside otherreserves, to transfer profits to the subsequent year or to distribute dividends to the holders ofa usııfructright cerliFıcate, to the rnembers of the board of directors or to the employees unless the requiredreserves and the dividend for shareholders as determined in the main agreement or in the dividenddistribution policy of the company are set aside; and no dividend can be distributed to these personsunless the determined dividend for shareho!ders is paid in cash.

NOTE 21- SALES AND COST OF SALES

Saks Revenue

1 January- 1 January- 1 April- 1 April30 June 30 June 30 June 30 June

2015 2014 2015 2014

Domestic sales 314.423 380.608 166.280 182.069Foreign sales 250.596 244.647 134.999 119.255Other sales 1.671 3.892 1.152 2.270Sales return (2.447) (3.498) (1.410) (1.352)Sales discoıınts (4.56!) (1.187) (3.851) (943)Other discounts (187) (336) (94) (24!)

Sales Revenues (net) 559.495 624.126 297.076 301.058

44

(CONVCNIENCE TRANSLATİON INTO ENGLİSH OF INTERIM FINANCİAL STATEMENTS ORİGINALLYİSSUED İN TURKISH)



NOTE 21— SALES AND COST OF SALES (continned)

Cost of Sales

1 January- 1 January- 1 April- 1 April

3OJune 3OJune 3OJune 3OJune

2015 2014 2015 2014

Direct first raw material and supplies expenses 355.227 441.846 190.828 219.296Energy expenses 55.487 49.776 27.759 25.386Labour expenses 28.703 23.816 14.901 12.313Amortization (Note 12) 4.396 7.704 2.207 4.020Other variable expenses 8.642 7.405 4.592 3.762Spare parts and maintenance expenses 4.000 2.562 2.178 1.549Insuranceexpenses 1.113 707 56! 356Other fixed expenses 68 67 43 31Usage of semi-finished goods (988) (526) (1.326) (497)

Production cost for the year 456.648 533.357 241.743 266.216

Usage of WIP and finished goods 10.991 18.72! (5.988) (1.775)Cost adjustment to unrealised sales 6.274 (10.660) 8.609 (19)Costofwaste goods sold 1.735 4.380 1.144 2.537Otlıer idle time expenses 2.967 3.914 1.440 1.961kile time type amortization (Note 12) 1.045 1.423 517 550Provision for impairment inventories - net (Note 9) 3.752 2.600 1.30$ (700)Stock count differences (88) (1.042) (42) (644)

Cost of good sold during the year 483.324 552.693 248.731 268.126

45

(CONVENİENCE TRANSLATİON INTO ENGLİSH OF İNTERİM FİNANCİAL STATEM£NTS ORİGINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENIS FOR THE PERIODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LIraQTL”) unless othenvise indicated

NOTE 22- OPERATING EXPENSES

General Administrative Expenses

1 January- 1 January- 1 April- 1 April3OJune 3OJune 3OJune 3OJune

2015 2014 2015 2014

Personnel expenses 4.330 4.961 2.625 2.698Seniority notice indemnity (Note 17) 1.247 850 - -

Consultancy expenses 569 552 434 271Amortization (Note 12) 548 487 288 246Insurance expenses 286 395 144 209Severance and notice pay 544 366 30! 124Supplies. repair and maintenance expenses 323 242 165 121Auxiliary expenses 284 108 111 58Energyexpenses IlO 114 59 54Other expenses 85! 681 540 305

9.092 8.756 4.667 4.086

Selling, Marketing and Distribution Expense


2015 2014 2015 2014

Export expenses 19.503 20.506 10.075 9.748Personnel expenscs 2.700 2.613 1.304 1.378Taxes and duties 1.166 737 244 349lnsuranceexpenses 483 411 207 257Energyexpenses 313 375 165 185Arnortization (Note 12) 282 285 141 142Rentexpenses 12 40 7 24Other 736 697 276 474

25.195 25.664 12.419 12.557

46

(CONVENIENCE TİUNSLATION INTO ENGLISH OF INTERIM FINANCİAL STATEMENTS ORIGINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) uniess otherwise indicated

NOTE 22- OPERATING EXPENSES (continued)

Research and Development Expenses


2015 2014 2015 2014

Amortization(Note 12) 721 819 361 410Maintenance expenses 27 7 12 7First raw material and supplies expenses 9 1 - -

Otherexpenses 155 101 77 58

912 928 450 475

NOTE 23 - INCOME/EXPENSE FROM INVESTNG OPERATİONS

None.

NOTE 24 - OTHER OPERATING INCOME / EXPENSE

Other operating income

1 January- 1 January- 1 April- t April


2015 2014 2015 2014

Foreign exchange gam from trade receivables /payables 39.705 23.82! 16.587 8.260

Miscallaneous sales income 11.344 18.595 5.493 13.547

Financial income from credit sales 2.114 1.350 1.100 828

Scrap sales income 793 555 452 390

Rent income (Note Il) 227 208 114 104

Insurance compensation income 159 39 130 18

Provision of ciosed requests for - 1.102 - 1.085

Provision no longer required 101 - 101 -

Otherincome 1.137 661 952 226

55.580 46.331 24.929 24.458

47

(CONVENİENCE TRANSLATİON INTO ENGLISH OF INTERM FINANCİAL STATEMENTS ORICINALLYISSU£D İN TURKISH)

SASA r0LYE5TER SANAYi A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 .RJNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise ndicated

NOTE 24— OTHER OPERATING INCOME / EXPENSE (continued)

Other operating expense

1 January - 1 January- 1 April- 1 April


2015 2014 2015 2014

Foreign exchange loss frorn trade receivables /payables 18.585 26.629 13.845 10.629

Miscallaneous sales expense 9.053 16.912 4.630 12.827Provision for flxed assel impairment(*) 6.195 - 6.195 -

Taxes and dutles paid 756 637 546 292

Provision for doubtful receivable expense(Note6) ISI 374 - lOSProvision for unused vacation (Note 17) 308 277 229 147Provision for restructuring expenses 234 89 223 -

Other 112 114 70 127

35.394 45.062 25.738 24.127

(t) Spare paris amouncing to TL 6.909 presented in inventory account has transferred as of 1 Januarv2014. Impairmenı anaiysis made for spare paris, asa result of this anaiysis impairment amounling TL6.195 15 booked under other operating expenses (Note 24) in the financial statements.

NOTE 25- FINANCİAL LNCOME

1 Januan’- 1 January- 1 April- 1 April3OJune 3OJune 3OJune 3OJune

2015 2014 2015 2014

Foreign exchange income 2.378 2.630 1.313 1.166

Interest income 284 142 103 108

2.662 2.772 1.416 1.274

NOTE 26- FINANCİAL EXPENSES

t January- 1 .January- 1 April- 1 April3OJune 3OJune 3OJune 30June

2015 2014 2015 2014

Foreign exchange losses 22.477 2.381 5.334 (644)

Interest expense 5.133 7.450 2.860 4.132

27.610 9.831 8.194 3.488

48

(CONVENIENCE TRANSLATİON İNTO ENGLISH OF INTERİM FINANCİAL STATEMENTS ORICINALLYISSUED İN TURKISH)

SASA OLYESTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish LiraC’TL”) unless otherwise indicated

NOTE 27- TAX ASSETS AND LIABILITIES

Deferred income taxes

The Company recognizes deferred income tax assets and liabilitles based upon temporaıy differencesarising between their ünancial statements as reported under CMB Accounting Standards and theirstatutory tax fınancial staıements. These differences usualiy result in the recognition of revenne andexpenses in different reporting periods for international Financial Reporting Standards and tax

purposes.

The composition of cumulative temporary difterences and the related deferred income tax assets andliabilitles in respect of irems for which deferred income tax has been provided at 30 June 2015 and 31December 2014 using the enacted tıx mtes are as foiiows:

Cumulative temporary Deferred income tax asse /difference (liabilities)

30 June 31 December 30 June 31 December

2015 2014 2015 2014

Net ditference benveen the tax base and canying

value oftangible and intangible assets (7.791) (13.906) (1.558) (2.781)

Retirement pay provision 19.597 18.446 3.919 3.689

Net difference between the tax base and

canying value of inventories 16.209 11.507 3,242 2.301

Corection of the sale that are not realize 8.673 3.595 1,735 719

Provision for accumulated unpaid vacation 2.164 1.856 433 371Heid for sale asset’s net difrerence benveen the book valueand tax value (815) (977) (163) (195)Provision for restruclion expense 819 675 164 135

Provision for restructuring asset for investments

net difference between the book value and tax value 121 357 84 71

Provision for doubtfiul receivable 1.304 1.304 261 261

Provision of export expense - 1 .705 341

Adjustment for not accrued flnancial expenses (181) (208) (36) (42)Adjustment for not accrued financial income 1.426 1.628 286 326Other 2,500 1.901 4989.510

Deferred income tax assets 12.025 8.712

Defened income tax Iiabilities (1.757) (3.018)

Deferred income fax asset/Iiabilities, net 10.268 5.694

49

(CONVENIENCE TRANSLATİON İNTO ENCLİSH OF İNTERİM FİNANCİAL STATEMENTS ORIGİNALLYİSSUED İN TURKISH)

SASA POLY£STCR SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish LiraCTL”) unless othenvise indicated

NOTE 27- TAX ASSETS AND LIABILİT[ES (continued)

Movenzenis in deferred ıcaes can be aııahcecl asfolİrnvs:

t January - 30 1 January - 30 June.June 2015 2014

Balance at 1 Januaıy 5.694 1.162

Deferred tax income ofihe term 4.574 1.586

Balance at 30 June 10.268 2.748

Total charge for the period can be reconciled to the accounting profit as follows:


(Loss)/ Profıt before tax from operations 36.210 30.295

Expected taxation (%20) (7.242) (6.059)Tax effects oE- Revenue that is exempt from taxation 266 333- Expenses that are not deductible in determining taxable profit (32!) (570)- Effect of prior period income tax offset from prior periodlosses - 7.783- Effect of investment allowances tax offset [rom prior periodlosses t 1.876 -

- Other adjustment (377) 99

İncome tax recognized in profit / (Ioss) 4.202 1.586

As of 30 June 2015 the Company had financial profit amounting to TL 59.378 . The Company hasused TL 56.827 investment incentive without withholding tax payable, TL 1.880 investment incentivewith withholding tax payable and TL 671 research and development deduction to offset financialprotit of the period. The Compan has investment incentives with withlıolding tax payable amount isTL 12.921 tlıat can be used in the foliowing periods.

Corporate Income Tax Law has been changed with the law nıımbered 5520 which was published at13 Jııne 2006. Most of the rules of the new Corporate Income Tax Law are applicable from 1 Januan’2006 According to this; corporate tax rate applicable for the year 2015 k 20% (2014: 20%).

50

(CONVENİENCE TRANSLATİON İNTO ENCLİSH OF INTERIM FİNANCİAL STATEMENTS ORICİNALLYİSSUED İN TURKİSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands ofTurkish LimC’TL”) unless otherwise indicated

NOTE 27- TAX ASSETS AND L[ABILITIES (continued)

Corporate tax rate 15 applied to the taxable profit which is calcuiated by adding non-taxable expenses anddedııeting some exemptions taken place in ta Iaws (exemptions for participation revenues, exemptionsfor investment incentives) and discoıınts (RSLD discount) from accounting profit of the Company. Noadditional taxes are paid unless profit 15 distributed (except 19, 8% withholding tax paid over ıısedinvestment incentives aceording to the GVK temporary article).The Constitutional Court abolished the provisions ofTemporary Anicle 69 of the Income Tax Lawregarding the time limitation to the investment allowance in its meeting heid on 15 October 2009, andpublished the minutes of the relevant meeting on its website in October 2009. The decision of theConstitutional Court on the cancellation of the time limitation for investment allowance for the years2006. 2007 and 2008 came into force with ils promulgation in the Offıciaf Gazene, dated 8 Januaıy2010, and thereby the time limitation regarding investment allowance “as removed, Iıowever it has alsobeen stated that balance regarding the calculation of the tax bases could not exceed 25% percent of therelevant income and the remaining balance afler the investment allowance should be subject to 20% ofcorporate tax. The Company has unutilized carried forward investment allowance amounting to TL12.921 coming from balance sııbject to 19,8%. The Company uses unused investment tax in financialstatements when tinancial income is occurred due to The Company cannot foresee its budget includingtaxable proflts in the following periods.

Dividends paid to non-resident corporations. vhich have a place of business in Turkey, or residentcorporations are not subject to withholding tax. Othenvise. dividends paid are subject to withholdingtax at the rate of 15%. An increase in capital via issuing bonus shares is not considered as a proFıtdistribution and thus does not incur withholding tax.

Corporations are required to pay advance corporation tax quanerly at the rate of 20% on theircorporate income. Advance tax is payable by the l7th (ineluding the tax statements of March 2007ıhat İncome Tax Law numbered 5615 is effective from 4 April 2007 and the Iaw about the change insome Iaws) of the second rnonth following each calendar quarter end. Advance tax paid bycorporations is crediıed against the annual corporation tax Iiability. The balance of the advance taxpaid may be refunded or used to set off against other Iiabilities to the govemment.

A 75% portion of the gains derived from the sale of preferential riglıts, usufruct shares and foundingshares from investment equity and real property which has remained in assets for more than two fiiliyears are exempt from corporate tax. To be eııtitled to the exemption. the reievant gam 15 required to beheid in a fund account in the Iiabilities and it must not be withdrawn from the entitv for a period of5 years. The sales consideration has to be collected up until the end of the second calendar yearfollowing the year the saie was realized.

in Turkey, there is ııo procedııre for a final and definitive agreernent on tax assessments. CompaniestHe tlıeir tıx retuns within the 25th of the fourth month foliowing the ciose of the tinanciai year to taxoftice which they reiate. However. tax returns are open for tive years from the beginning of the yearthat follows the date of fihing during which time the tax aııthorities have the right to audit tax retums.and the related accounting records on which they are based, and may issue re-assessments based ontheir flndings.

51

(CONVENIENCE TRANSLATİON INTO ENCLISII OF INTERİM FINANCİAL STATEMENTS ORIGİNALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERIODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish Liraç’TL”) unless otherwise indicated

NOTE 27- TAX ASSETS AND LIABILITIES (continued)

Total taxes payable For 30 June 2015 and 2014 have been reconciled tofo 1 lows:

the current year tax charge as

1 January30 .Iune 2015

1 .January30 June 2014

1 April -

30 June 20151 April -

30 June 2014

Tax charge for the period

Deferred tax incorne / (expense)

Total tax benefit 4.202 1.586 3.635 241

NOTE 28- EARNINGS PER SHARE

Net (Ioss) / gam atiributable toslıareholdersNumber of ordinaıy sharesEarnings per share in fulI TLhundreds of ordinary shares

2015 2014

40.412 31.88121.630.000.000 21.630.000.000

0.19 0,15

26.857 14.17221.630.000.000 21.630.000.000

0,12 0.07

NOTE 29- RELATED PARTY DISCLOSURES

Operations witlı related parties are classified according to the groups mentioned be!ow and ineludedisclosures in this nole for alI related parties.

(1) Jointly controlled entities(2) Companies of whiclı the group shareholders are(3) Ultimate shareholder

a) Due from related parties:

a shareholder

30 June 2015 31 December2o(4

Croup Companles-Merinos Hali San. Tic. A.Ş. (2)

- Aksigorta A.Ş. (“Aksigorta”) (2) (*)

- Enerjisa Enerji Üretim A.Ş. Enerjisa’) (2) (*)

- Temsa Sanayi ve Ticaret A.Ş. (2) (*

(*) These companies re no longer related parties. Sabanci Holding A.Ş sold %51 share in SasaPolyester Sanayi A.Ş. to Erdemoğlu Holding A.Ş as of3O April 2015.

52

(372) - (372) -

4.574 1.586 4.007 241

1 January30 bine

1 January30 June

1 April30 June

2015

1 April30 June

2014

56 327

56- 309- 17

)Total 56 327

(CONVENIENCE TRANSLATİON INTO ENGL(SH OF INTERIM FINANCİAL STATEMENTS ORICINALLYİSSLED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCL4L STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless otherwise indicated

NOTE 29- RELATED PARTY DISCLOSURES (continued)

b) Duc tü related parties:30 June 2015 31 December 2014

2) Group Companies-Merinos Mobilya Tekstil San. Tie. A.Ş. (2)- Enerjisa Doğalgaz Toptan Satış A.Ş. (2)(*)-Toroslar Elektrik Perakende Satış A.Ş. (2) (*)

-Aksigorta (2) (*)

Total

2 9.3842

9.367134

2 9.384

(9 Tlıese companies are no longer related parties. Sabancı Holding A.Ş sok %51 share in SasaPolyester Sanayi A.Ş. to Erdemoğlu Holding A.Ş as of 30 April 2015.

c) Bank Deposits:30 June 2015 31 December 2014

Akbank(2)- 615

Total- 615

d) Sales to related partles:

1 January 2015-30 June 2015Good Sen’ice Fjıed Asset

2) Group Companies 848 68-Merinos Halı San. Tie. A.Ş. (2) 52 - -

-Merinos Mobilya Tekstil San. Tie. A.Ş. (2) 46 - -

- Kordsa (2) (9 750 - -

Enerjisa(2)(*)- 57 -

- 6 -

- Temsa (2) (9 - 5 -

Total 848 68

53

(CONVENİENCE TRANSLATİON İNTO ENGLISH OF İNTERİM FİNANCİAL STATEMENTS ORICİNALLYİSSUED İN TURKİSH)




1 Januaıy 2013-30 .June 2013

Good Senice Fixed Asset

2> Group Companies

- Enerjisa (2) (9- Temsa (2) (9

TornI

88

85

3

88

1) Shareholders- Sabancı Holding (3)

2) Group Companies-Merinos Hali San. Tic. A.Ş. (2)-Merinos Mobilya Tekstil San. Tic. A.Ş.

- Kordsa (2) (*)

- Enerjisa (2) (*)

- Temsa (2) (9

1 April -30 .June 2015Good Senice

1 Apriİ-30 June 2015Good Sen’ice

t 0052

46

2

30

29

Fixed Asset

Fixed Asset

Total 100 30 -

1 April -30 June 2014Good Service Fixed Asset

2> Group Companies - 44 -

- Enerjisa (2) (9 - 42 -

- Temsa (2) (*)- 2 -

Total - 44

(*) These companies are no longer related parties. Sabancİ Holding A.Ş sold %51Polyester Sanayi A.Ş. to Erdernoğlu Holding A.Ş as of3O April 2015.

share in Sasa

54

(CONYENİENCE TRANSLATİON INTO ENULISU OF INTERİM FINANCİAL STATEMENTS ORIGINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraÜTL”) unless otherwise indicated

NOTE 29- RELATED PARTY D[SCLOSURES (continued)

e) Purchases from related partics:

1 January 2015-30 June 2015

1) Shareholders

- Sabancı Holding (3) (*)

Good Sen’ice Fixed Asset Rent3636

2) Group Companies-Toroslar Elektrik Dağıtım A.Ş. (2) (*)

- Aksigoda (2) (*)

- Bimsa <2) (9- Avivasa (2) (9- Enerjisa (2) (*)

- Sabtek (2) (*)

17.324 15.22215.136 -

1.820 -

243 463

117

14.759

- 8 - -

Total - 17.324 15.222 36

1 January2fll4-3OJune2Ol4

Good Sen1ce Fixed Asset Rent

1) Shareholden - - - 49

- Sabancı Holding (3) (9 - - - 49

2) Group Companies 1 44.083 535 -

- Enerjisa (2) <*)- 41.565 . -

- Aksigorta <2) (9 - 1.850 - -

- Bimsa (2) (9 - 323 535 -

- Toroslar Elektrik Dağıtım (2) (9 - 157 - -

- Avivasa (2) (9 - 157 - -

- Akyatırım Menkul Değerler A.Ş.(2) (9 - 16 - -

Sabtek<2)(*)- 10 - -

- Sabancı Üniversitesi (2) (*). 5 - -

- Yünsa(2) (9 ı - - -

Total 1 44.083 535 49

55

(CONVENIENCE TRANSLATİON INTO ENGLİSH OF INTERIM FINANCİAL STATEMENTS ORİGINALLYISSUED İN TURKİSH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PEİUODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless othenvise indicated

NOTE 29- RELATED PARTY DISCLOSURES (continucd)

1 April-3OJune2OlSGood Service Fixed Asset Rent

1) Shareholders- Sabancı Holding (3) (*)

99

2) Group Companies-Toroslar Elektrik Dağıtım A.Ş. (2) (*)

- Aksigorta (2) (*)

Bimsa (2) (*)

Avivasa (2) (*)

Enerjisa (2) (*)

Sabtek (2)(*)

7.448 12.7306.884 -

456 -

118 4(10)

12.726

(9 These cornpanies are no longer related parties. Sabancı Holding A.ŞPolyester Sanayi A.Ş. to Erdemoğlu Holding A.Ş as of April 30, 2015.

sold %51 slıare in Sasa

Total - 7.448 12.730 9

e) Purchases from related parties (continued)

1 April-3OJune2Ol4Good Service Fixed Asset Rent

1) Shareholders - - - 25

- Sabancı Holding (3) (*) - -- 25

2) Group Companies - 22.429 92 -

.Enerjisa(2)(*)- 21.140 - -

- Aksigona (2) (*)- 642 - -

- Bimsa (2) (*)- 200 92 -

- Toroslar Elektrik Dağıtım (2) (*)- 69 - -

- Avivasa (2) (*)- 78 - -

Total - 22.429 92 25

56

(CONVENIENCE TRANSLATİON INTO ENCLISH OF INTERIM FINANCİAL STATEM£NTS ORİCİNALLYISSL’ED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Arnounts expressed in thousands of Turkish Lira(’ TL”) unless otherwise indicated


fl Financial income

1 January -30 1 January -30 1 April -30 1 April -30June2OlS June2Ol4 June2OlS June2014

Akbank (2) - - 4

Total - 13 - 4

g) Financial expense

1 January -30 1 January -30 1 April -30 1 April -30June 2015 June 2014 June 2015 .June 2014

Akbank(2)- 78 - 24

Total - 78 - 24

t) As oOO June 2015 and 2014 remuneration ofdirectors and key management personnel amounts areas follows:

1 Janııa’ -30 1 January -30 1 April -30 1 April -30June2OlS June2Ol4 June2OlS June2Ol4

Short term empioyec beneflts 1.415 992 652 607

Total 1.415 992 652 607

NOTE 30- FINANCİAL RİSK MANAGEMENT

Financial Risk Management

Fincuşcial risk fıctors

The Company’s activilies expose it to a variew of financial risks. including the effects of changes indebt and equitv market prices. foreign curency exclıange rates and interest rates. The Compan’soverail risk managemenı programme focuses on the unpredictability of financial markets and seeks tominimize potential adverse etTects on the financial performance of the Company.

The Company’s risk management is implemented by the Company’s Treasııry Department accordingto approved policies by Board of Directors. Treasıııy Department detects and evalııates financial risksand relieve ofa risk throngh close relations with other departmenıs of the Company.

57

(CONV£NIENCE TRANSLATİON INTO ENCİİSH OF INTERIM EINANCIAL STATEMENTS ORICINALLYISSUED İN TURKISH)

SASA rOLVESTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FİNANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraC TL”) un!ess othenvise indicated

NOTE 30- FLNMNCIAL RİSK MANAGEMENT (continued)

Market risk

Foreign exchange risk

The Company k subject to foreign exchange risk due to foreign cunency denominated liabilitles andassets’ translation to Turkish Lira. Foreign exchange risk is traced and minimized through the analysisof foreign cunency position.

Foreign Currency Position TaNe

Assets and Iiabilities denominated in foreign currencies at 30 June 2015 and 3! December 2014 are asf’o 1 lows:

TL USD EURO CBP

Monetary fınancial assets

245.073 62.529.579 25.794.467 41.479

3 1 .672 9.971.968 1.624.402 9.499

121 - 29.960 7.511

276.866 72.50L547 27.448.829 58.48927.448.829 58.489

Trade receivables (including otherreceivables)

30 June 2015

(including cash and banks)

Other

Currcnt Asset

Total Asset 276.866 72.501.547

Trade payables (includina otherpayables) 126.109 2.248.469 10.255.477 4.498Financial Iiabiliıies 144.888 44.500.000 8.500.000Other 1.271 36.409 389.392 2.732Short term Iiabilities 272.268 46.784.878 49.144.869 7.230

Financial liabilitles - - . -

Long term Iiabilities - - . -

Total Liabilities 272.268 46.784.878 49.144.869 7.230

Net foreign currency position 4.598 25.716.669 (21.696.040) 51.259

Export 250.596 7.056.126 77.019.140Import 324.616 21 .712.974 93.279.657

210.586

58

(CONVENIENCE TRANSLATION INTO ENGLISH OF INTERH%I FINANCİAL STATEMENTS ORICINALLYİSSUED İN TURKİSH)

SASA r0LYESTER SANAYİ A.Ş.

EXPLANATORY NOTES TO THE FİNANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LImÇTL”) unless othenvise indicated

NOTE 30- FİNANCİAL RİSK MANACEMENT (continued)

31 December 2011

Other

Current Asset

TornI Asset

Export

Import486.373

563.573

20.220.656 151.103.786

73,296.991 139.743.628

79.9682.611

Trade receivables (including otherreceivables)

Monetaiy fınancial assets

(including cash and banks)

TL USD EURO GBP

214.645 72.239.991 16.707.388 -

2.062 664.032 179.614 4.278

1.206 3.847 414.814 7.511217.913 72.907.870 17.301.816 11.789

217.913 72.907.870 17.301.816 11.789

Trade payables (including otherpayables) 84.934 1.254,205 29.076.665 2.594Financial liabilitles 134.813 58.136.581 -

Other 88 37.721 15 -

Short term Iiabilities 219.835 59.428.507 29.076.680 2.594Financial Iiabilities . - . -

Long term Iiabilities - - - -

iMal Liabilities 219.835 59.428.507 29.076.680 2.594

Net foreign currency position (1.922) 13.479.363 (11.771.864) 9.195

59

(CONVENIENCE TRANSLATİON INTO ENCLİSH OF INTERIM FİNANCİAL STATEMENTS ORİCİNALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCEAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Anıounts expressed in housands of Turkish LiraCTL”) unless otherwise indicated

NOTE 30- FESANCIAL RİSK MANAGEMENT (continned)

Foreign Curreney Scnsitivity Anaiysis

Profit / (Loss)Appreciation of Depreciation of

As of 30 June 2015 Foreign Currencv Forei2n Currencv

10% change in US DoIIar/TL Parity:

US Dollar net asset 6.908 (6.908)US Dollar net Iıedged amount -

US Dollar Net Effect 6.908 (6.908)

10% ehange in Euro/TL Parity:

Euro net asset (6.470) 6.470Euro net hedged amount

- -

Furo Net Effect (6.470) 6.470

10% change in GBPİTL Parity:

GBP net asset 22 (22)GBP net Iıedged amount

- -

GBP Net Effect 22 (22)

Total 360 (460)

60

(CONVENIENCE TRANSLATION İNTO ENGLISH OF İNTERİM FİNANCİAL STATEMENTS ORİGINALLYISSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERIODBETWEEN 1 JANUARY -30 ilİNE 2015(Amounts expressed in thousands of Turkish LiraC’TL”) unless othenvise indicated

NOTE 30- FINANCİAL RİSK MANAGEMENT (continucü)

As of 31 December 2014

Profit / (Loss)Appreciation of Depreciation of

Foreign Currenev Foreign Currencv

10% change in US DolIar/TL Parity:

US Dollar net assetVS Dollar net hedged amountUS Dollar Net Effcct

lızlerest rate risk

The Company is exposed to interest rate risk through the impact of rate changes on interest bearingliabilities and assets. The company manages its not used cash on hand by time deposits. Income, otherthan not used cash on hand, and cash flows froın operations are considerabiy free from market interestrate changes. The interest risk of the company arises from fixed rate short term borrowings.

To keep tlıis exposure ata minimum level, the Company tries to borrow at the most suitable rates.

Interest Rate Position Table

3OJune2Ol5 31 December 2014

Fixed interest rate financial instrumentsPrinciple 188.427 197.782Interesı 1.634 6.060

Total flxed financial liabilities 190.061 203.842

3.126 (3.126)

3.126 (3.126)

10% change in Euro/TL Parity:

Euronetasset (3.321) 3.321Euro net hedged amount - -

Furo Net Effect (3.321) 3.321

10% change in GBP/TL Parity:

GBP net asset 3 (3)GBP net hedged amount - -

GBP Net Effect 3 (3)

Total (192) 192

61

(CONVENİENCE TRANSLATİON İNTO ENCLİSH OF İNTERİM FİNANCİAL STATEM£NTS ORIGİNALLYİSSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Arnounıs expressed in thousands ofTurkish LiraCTL’) unless othenvise indicated

NOTE 30- FNANCIAL RİSK MANAGEMENT (continued)

Gredit risk

Credit risk consists of cash and cash equivalents, deposits at banks, customers sııbject to credit riskdue to uncollected receivables.

Receivables

The Company implements Credit Control procedure approved by the Board of Directors in order tomanage credit risk due to receivables from cııstomers. According to the procedure. the Companydetermine a risk limit for ever single customer (except related parties) by taking into considerationreceivable insurance, bank guarantee. mortgage and other guaranıees and sales are conducted withoutexceeding customer risk Iimits. in circumstances where these guarantees do not exist or it k requiredto exceed the gııarantees, sales are conducted through determined internal Iimits which are specitied inthe procedure.

Credit Risk Exposure according tü Financial Instruments Types

30 June 2015

- Maximum credit risk exposure

Receiv,ıbles

Trade Receivalıles Other Receivahles Time

Relaled Party Olber Related Pariy Olher Deposit

as of balance sheet date 56 252.158 - 1.319 57.236- Guamnteed maximum risk by

Commitment or ere (1 - 20605 İ - -

- Net book value of non-overdue of

unimpaired fınancial asset 56 237. İ 86 - İ .3 İ 9 57.236Net book value of financial assets

that would be overdue or impaired

unless restricted - - - - -

Net book value of overdue assets

that are not impaired - 1 1.539 - -

- The part that is guaranteed by

commitment or etc - 10.182 - - -

Net book value of impaired assets - 3.433 - - -

- Overdue (ross book vahim) - 3.433 - - -

- impaimıent (3.433) - -

Guarantees include receivable insurance, bank cohlateral, mortgages, and customer checks.

62

(CONVENIENCE TRANSLATİON INTO ENGLİSH OF İNTERIM FINANCİAL STATEMENTS ORİGİNALLYİSSUED İN TURKISH)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 .JUNE 2015(Amounts expressed in thousands of Turkish LIraQTL”) unless othenvise indicated

NOTE 30- FINANCIAL RİSK MANAGEMENT (continued)

Credit Risk Exposure according to Financial Instruments Types (continned)

30 June 2014

Recdvııblcs

rrdc Rcccivuİ,Ics Olhcr Rccciv,ıbles Iimc

İ<elaicd Party Other Reluted Pıır(y Other Dcpot

- Maximum credit risk exposure

as of balance sheet date - 235.651 327 3.237 13.982- Guaranteed maximum risk by

Commitment or ec (fl - 218.303 - - -

- Net book value of non-overdue of

unimpaired fınancial asset - 218.303 327 3.237 13.982Net book value of financial assets

that would be overdue or impaired

unless restricted - - - - -

Net book value of overdue assets

that are not impaired - 14.066 - - -

- The pafl tl-tat is guaranteed by

commitment oretc 12.288 - - -

Net book value of impaired assets - 3.282 - - -

- Overdue (gross book value) - 3.282 - - -

- Impairment (3.282) - - -

As of3O June 2015 and 31 December 2014 net book valuefo 1 Iows:

of overdue assets that not impaired is as

Trade Receivables 30 June 2015 31 December 2014

Overduc 1-30 days

Overdııe 1-3 rnonthsOverdue 3-12 months

Guaraniees include receivable insurance. bank collateral, mortgages, and customer checks.

10.121 12.156

920 1.714

Total 11.539 14.066Portion under the guarantee ofcollaterals. etc (*) 10.182 1 2.288

498 196

63

(CONVENIENCE TRANSLATİON INTO ENGLİSH OF INTERIM FİNANCİAL STATEMENTS ORIGİNALLYİSSUED İN TURKISH)


EXPLANATORY NOTES TO THE FİNANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LIraCTL”) unless otherwise indicated

NOTE 30- FINANCİAL RİSK MANAGEMENT (continued)

Liquidiıv risk

Prudent Iiquidiw risk ınanagement implies maintaining sufficient cash and marketable securities, theavailability of funding through an adequate amount of commined credit facilitles and the ability toclose out market positions. Due ta the dynamic nature of the underlving business the Company aims toınaintain llexibility in funding by keeping committed credit lines available.

As of 30 June 2015;

Contractual maturities

Financial Liabilities Other than Derivatives

Total CashOutflow Duc to

Book Valuc Contracts 3 months 3-ü months 1-5 ycars

Bank borrowings 190.061 191.924 79.128 112.796 -

Trade payables 12.050 12.050 12.050 - -

Expected maturiticsTotal Cash

Outflow Duc toBook Valuc Con(racts 3 months 3-12 months 1-5 years

Trade payables 144.892 145.073 116.934 28.139 -

Other payables 2.239 2.239 2.239 - -

64

(CONVENIENCE TRANSLATİON INTO ENCLISH Oİ INTERIM FINANCIAL STAT£MENTS ORIGINALLYISSUED İN TURKISII)


EXPLANATORY NOTES TO THE FINANCİAL STATEMENTS FOR THE PERİODBETWEEN 1 JANUARY -30 JUNE 2015(Amounts expressed in thousands of Turkish LiraÇ’TL”) unless otherwise indicated

NOTE 30- FINANCİAL RİSK MANAGEMENT (continned)

Asof3l December 2014;

Contractual maturiticsFinancial Liabilities Other (han Derivatives

Tatal Cash

Outflow Duc to

Book Value Contracts 3 months 3-12 montlıs 1-5 years

Bank borrowings 203.992 204.963 94.228 106.543 4.192

Trade payables 16.481 16.481 16.481 - -

Eıpected maturities

Financial Liabilities Other (han Derivatives

Total Cash

Outflow Due taBaak Value Cantracts 3 months 3-12 months 1-5 years

Trade payables 96.422 94.951 77.841 17.110 -

Other payables 1.697 1.697 1.697 - -

Funding risk

The ability to fund the existing and prospective debt requirements is managed by maintaining theavailability ofadeqııately committed funding lines from high quality Ienders.

65

(CONVENIENCE TRANSLATİON INTO ENGLISH OF INTERIM FINANCİAL STATEMENTS ORIGINALLYISSUED İN TURKISH)



NOTE 30- FINANCİAL RİSK MANAGEMENT (continued)

The Company’s objectives when managing capital are to safeguard the Company’s ability to continueas a going concern in order to provide retuns for shareholders and benetits for olher stakeholders andto maintain an optimal capital structure to reduce the cost of capital.

in order to maintain or adjust the capital structure, the Company may adjust the arnount of dividendspaid to sharehoiders, issue new shares or seli assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the net debd(sharehoiders’ equity + net debt) ratio. Net debt 15 caiculated as tolal borrowings (ineludingborrowings, trade and other payables as shown in the balance slıeet) less cash and cash equivalents anddeferred tax liability.

As of 30 June 2015 and 31 December 2014 net debt/ (sharehoiders’ equity + net debt) ratio is asfo 1 lows:


Total borrowings 383.149 345.208

Cash and cash equivalents (57.239) (13.986)Deferred lax liabiiities 10.268 5.694Net debt 336.178 336.916Sharehoider’s equity 360.748 320.336Sharehoider’s equity+net debt 696.926 657.252Net debU(Sharehoiders’ equity+net debt) ratio 48% 51%

NOTE 31- SUBSEQUENT EVENT

1-lacı Ömer Sabancı Holding A.Ş soid al! shares in SASA Polyester Sanayi A.Ş with a nominal valueof 110.313.001,18 TL corresponding to 51 % of the share capital of the Company, 10 ErdemoğlııHolding A.Ş. with the cost of USD 104.189.990; the transfer of shares took piace on 30 April 2015.Erdemoğlu Holding A.Ş. has made the share purchase transaction between 14 Iuly 2015 and 4 August2015 in accordance with Capital Markets Board’s 11.26.1 takeover bids communiqu. At the end oftakeover bids, Erdemoğlu Holding ratio of shares owned by Sasa Polyester Sanayi A.Ş. has reached84,80% anda nominal amount of TL 183.430.724,77.

66

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